Saturday, October 08, 2005

Is the Nobel Prize Overrated?

Suppose that Kahn won the Nobel Prize, I would love to be handed a million dollar check and receive a nice write up in the New York Times praising my past research. For one day, my mother would be quite proud of me. But think about it, why is this Prize so prized? Why do academic economists get so excited about this prize announcement each October?

The typical winner has been a tenured faculty member at a leading research institution for 30+ years. He knows that he has made a major contribution to research and he probably made this contribution a long time ago. He knows that his colleagues know that he is a heavyweight. So, why do these guys yearn for a “pulse” to remind everyone of what they already knew? Are neo-classical economists really “keeping up with the Joneses” envious people such that we need to remind everyone how smart and special we are?

Do economists yearn to win this prize to impress their friends who are not economists? To increase their consulting fees? To rub their academic enemies faces in the mud and get the last laugh with respect to old unsettled debates? To remind the next generation of economists who may have heard of the Winner but has never actually read any of his papers of his continued greatness?

Winning this prize can actually distract you from continuing on with your current mundane research agenda. The Nobel Prize winners are viewed as having an IQ = 300 and thus can comment on any issue. Forget comparative advantage.

Does the Nobel offer immortality? As the stock of winners converges to infinity this seems less likely.

Who are these Swedes who actually makes the decision concerning who merits a Nobel Prize? Vague information is provided at this website.

Contrast this mysterious process with how the Clark Medal is Determined. Here is the current Committee that determines Awards and Honors.

Avinash Dixit, Chair Chuck Manski
Lars Peter Hansen Andrew Postlewaite Kenneth S. Rogoff
David K. Levine James Poterba Christina Romer

This looks like an all star cast of relatively young active researchers. Each of them are major stars in their sub-fields. For some reason, the Clark Medal merits almost zero coverage while folks go gaga over the Nobel Prize.

The real reason that we celebrate the Nobel Prize is because we know it is a salient event. It is the one day a year when "regular joes" think about academic economics. This is our one day a year where we can actually teach people some of the big ideas of economics by fleshing out the contributions of the New Laureates. This is what I do in class and what I talk to my parents about.