October 20, 2007 The Prize That Even Some Laureates Question By PATRICIA COHEN New York Times
Carping from time to time over the unworthiness or politics of a particular Nobel peace or literature laureate is expected. But when it comes to economics, it’s the award itself that sometimes comes in for sneers; even a couple of its winners have suggested it be abolished.
Unlike the original five prizes named in Alfred Nobel’s will more than a century ago, the economics award — formally called the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel — was created in 1968 by the nation’s central bank in honor of its 300th anniversary. But it isn’t so much bloodlines that have stirred up dismay as the kind of work that has often been honored.
“They’re not engaged in the problems of the actual world,” said James K. Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs at the University of Texas in Austin, voicing an all-too-common complaint that much of the Nobel-anointed economic work seems out of touch with reality.
Complaints about prize winners generally fall into one of three categories: too ideological; too preoccupied with theory and mathematics; or too narrowly focused on problems facing Wall Street instead of on pressing global issues like inequality, poverty and the environment.
“Historically, there was a lot of justification to the critique that it was somewhat ideological in nature,” said Joseph E. Stiglitz, who won the prize in 2001 along with George A. Akerlof and A. Michael Spence for their analyses of markets in which people are informed to different degrees.
He referred to a six-year period in the 1990s when economists from the University of Chicago — Milton Friedman’s headquarters and the temple of laissez-faire economics — won five of the prizes. Some of that work, he complained, “was clearly not breakthrough in any fundamental sense.”
That is no longer the case, he said; indeed, he said, the trouble now stems from the committee going to the opposite extreme.
“The main criticism right now is, if anything, they’re slanted more to mechanical modeling and technical advances,” he said. “One can understand that as part of a response to criticisms that they were too ideological,” he explained, but the problem is that not enough thought has been given to “how substantial the work is.”
That’s not how Gary S. Becker — an economist at the University of Chicago who won the 1992 prize for applying economic theory to a wide range of human behavior, including crime and racial discrimination — sees it.
“People have different judgments about what constitutes the biggest contribution,” he said, but he maintains that the winners “do reflect the most important work in economics” and that the work being honored is “useful in understanding how societies work.”
Amartya Sen, one of the few winners whose work focuses on social welfare, said he, too, thought the winners were “very worthy” of the honor. He was particularly pleased that this week the prize went to Leonid Hurwicz, 90, and Roger B. Myerson and Eric S. Maskin, both 56 — three American economists who helped create and develop a sophisticated explanation of the interaction among individuals, markets and institutions.
While “there was a fair amount of criticism” about ideological bias more than a decade ago, he said, that has not been the case recently. A lot of work has been “connected to technical reasoning,” Mr. Sen said, but that is “related to the nature of the subject.”
Mr. Becker compared the field of economics with chemistry or physics, in which there is “more of an orientation towards theory” to get at more fundamental questions. He also dismissed the idea that the string of University of Chicago awards showed a political bias, saying the work for which those academics were honored had “nothing to do with ideology.”
The hard-science prizes were certainly the model for the newest Nobel. As Burton Feldman explains in his book “The Nobel Prize: A History of Genius, Controversy and Prestige,” the economics award was created at a time of exuberant affluence, when mathematics and statistics had colonized economics and practitioners were claiming their field was more akin to physics than to sociology.
Yet the notion that economics is scientific, said Jeff Madrick, the director of policy research at the Schwartz Center for Economic Policy Analysis at the New School in New York, is “highly exaggerated.”
Mr. Madrick not only doubts that significant contributions in the field can be limited to those based on econometrics but also questions whether that type of work is as unbiased as is often claimed. “The Nobel prize has become quite a political animal,” he said, “in the disguise of being scientifically pure.”
This was the heart of the complaint from the Nobel winner Gunnar Myrdal. In a 1977 letter to a Swedish newspaper, he rejected the idea that the field of economics could claim a Nobel on the basis of its scientific rigor. Economics should concern itself with political and social needs, he argued, and he called for an end to the prize in economics.
The free-market conservative Friedrich von Hayek, who shared the Nobel in economics with Myrdal in 1974 despite being his ideological opposite, agreed on that point. If he had been asked, Hayek said, he would have “decidedly advised against” creating an economics prize.
Barbara Bergmann, an emerita professor at American University and the University of Maryland, said the same problem that afflicts the award afflicts the profession as a whole: too much theorizing and not enough actual research.
For all its prestige, the award’s biggest failing, Mr. Galbraith complained, is that “certain branches of economics have been more or less excluded,” citing as examples work on poverty, inequality, the economics of climate change, the collapse of communist economic systems and debt crises.
Mr. Galbraith needed to look no farther than his own dinner table for evidence. His father, John Kenneth Galbraith, one of the most influential economists of the 20th century but always an outsider to the academic ranks of the profession, never won the prize.
Mr. Sen also mentioned John Kenneth Galbraith as someone who could have been honored but was overlooked. Work dealing with unemployment, inequality and poverty, Mr. Sen agreed, has not been cited in Stockholm very frequently.
“Those require recognition, too,” Mr. Sen said, “but that doesn’t mean those who were recognized don’t deserve it.”
