voluntaryXchange

Krugman Wins the Nobel

Well ... wrong again.

But, no matter what I said the other day, Krugman is a great selection. I think everyone has known since the mid-80's that he was a lock to get the prize ... someday (he was on the list that I put together in 2002 and posted to the original MacroBlog, as well as this one from voluntaryXchange in 2005, this one from 2006, and my A list from last year).

I'm glad they didn't dilute his award by making it joint with someone else. It's arguable that he did less work than some others in the area for which he is getting the award, but I personally think the stuff he did was more pathbreaking.

What Krugman did was put together a fourth explanation for trade. Up to that time there were three: 1) you have a unique resource that others have to trade for, 2) you have a comparative advantage (this idea goes back to Ricardo), or 3) you have a concentration of a factor of production that helps you make things that require that factor more cheaply than others (this theory is associated with 1977 laureate Bertil Ohlin). Adding something to that list is really, really, fundamental.

Krugman's theory relies on increasing-returns-to-scale - this is when getting bigger makes you more profitable. Krugman's insight was that this gives you an incentive to trade more widely. This explains a lot of things, but most fundamentally, why parties will trade the same thing with each other (like Ford and Mercedes selling cars in each others countries).

The only thing that bugs me about this award is that I'm having a hard time figuring out how the Nobel committee decides to bypass older economists for younger ones one year, and then to revisit the old ones the next year. This seems kind of arbitrary to me. There's been a shortage of awards lately for those born between 1935 and 1950 (and only 1 of the last 16 was born between 1935 and 1940). Did those folks do something wrong I don't know about?

Technorati Tags: nobel,prize,2008,economics,krugman

This Year's Peace Prize

I was right a year ago. The odds were that the deserving people in the previous post would not get the prize.

Not that this year's award is too bad ... but it's just another U.N. bureaucrat.

Tell me again why a group whose agents can't engage in conflict is more deserving than someone who can choose to avoid engaging in conflict?

Technorati Tags: nobel,peace,prize,2008

Who Should Win the Nobel Peace Prize?

I wonder if the people who choose the Nobel Peace Prize have been paying attention - here are some suggestions for worthy recipients:

...The Burmese monks whose defiance against, and brutalization at the hands of, the country's military junta in recent weeks captured the attention of the Free World.

... Morgan Tsvangirai, Arthur Mutambara and other Zimbabwe opposition leaders who were arrested and in some cases beaten by police earlier this year while protesting peacefully against dictator Robert Mugabe.

... Father Nguyen Van Ly, a Catholic priest in Vietnam arrested this year and sentenced to eight years in prison for helping the pro-democracy group Block 8406.

... Wajeha al-Huwaider and Fawzia al-Uyyouni, co-founders of the League of Demanders of Women's Right to Drive Cars in Saudi Arabia, who are waging a modest struggle with grand ambitions to secure basic rights for women in that Muslim country.

... Colombian President Álvaro Uribe, who has fought tirelessly to end the violence wrought by left-wing terrorists and drug lords in his country.

... Garry Kasparov and the several hundred Russians who were arrested in April, and are continually harassed, for resisting President Vladimir Putin's slide toward authoritarian rule.

... The people of Iraq, who bravely work to rebuild and reunite their country amid constant threats to themselves and their families from terrorists who deliberately target civilians.

... Presidents Viktor Yushchenko and Mikheil Saakashvili who, despite the efforts of the Kremlin to undermine their young states, stayed true to the spirit of the peaceful "color" revolutions they led in Ukraine and Georgia and showed that democracy can put down deep roots in Russia's backyard.

... Britain's Tony Blair, Ireland's Bertie Ahern and the voters of Northern Ireland, who in March were able to set aside decades of hatred to establish joint Catholic-Protestant rule in Northern Ireland.

... Thousands of Chinese bloggers who run the risk of arrest by trying to bring uncensored information to their countrymen.

... Scholar and activist Saad Eddin Ibrahim, jailed presidential candidate Ayman Nour and other democracy campaigners in Egypt.

Or, posthumously, to lawmakers Walid Eido, Pierre Gemayel, Antoine Ghanem, Rafik Hariri, George Hawi and Gibran Tueni; journalist Samir Kassir; and other Lebanese citizens who've been assassinated since 2005 for their efforts to free their country from Syrian control.

Or to the Reverend Phillip Buck; Pastor Chun Ki Won and his organization, Durihana; Tim Peters and his Helping Hands Korea; and Liberty in North Korea, who help North Korean refugees escape to safety in free nations.

These men and women put their own lives and livelihoods at risk by working to rid the world of violence and oppression. Let us hope they survive the coming year so that the Nobel Prize Committee might consider them for the 2008 award.

This is drawn from The Wall Street Journal in the wake of the non-sensical award of 2007.

I put the odds at 50/50 that the Nobel committee will ignore everyone on this list in 2008.

2008 Nobel Prize Predictions

Time to look foolish again.*

The announcement will be made in a few days.

I still think Jagdish Bhagwati is the top person without an award in an underrepresented field (trade).

There's a lot of talk about Sargent this year. I think I rank him even higher than most other folks. I don't think he'd win alone though. He could be paired with Barro (for new classical macro), with Sims (for dressing down simultaneous equation modeling), or with Hansen (for developing GMM). Frankly, I think any of those 4 could get it on their own if they live long enough.

There's also been a lot of talk about Martin Feldstein. Not this year - because of his association with AIG. Personally, I think he's overrated anyway - he has a huge cheering section from his former students. They've made enormous contributions on their own, but they don't give Nobel's for mentoring.

In the past, I've also expressed a soft spot for Dale Jorgenson.

There's also the really old guys who deserve it and might not be here next year: Arnold Harberger, or Armen Alchian and Harold Demsetz, or David Cass, Peter Diamond, Karl Shell, and Hirofumi Uzawa.

Here's a dark horse whose work might be recognized this year because it is fundamental to understanding financial bubbles: Philip Cagan.

Then there are some old standards: Fama and French,  Dickey and Fuller, Johansen, Chow, Dixit and Helpman, and Romer.

Well ... I must sound like a Marxist ... covered most of the possibilities but didn't commit to any of them.

* There have been 4 awards since I started making predictions. Prescott and Kydland won in 2004 - I thought they would win eventually, but not while still so young. Aumann and Schelling won in 2005, and were not on my radar screen. Phelps won in 2006, and he was always high on my list but I thought the committee had passed him by. Last year, I had also given up on Hurwicz, but I had no clue that Maskin and Myerson were that big a deal.

Technorati Tags: economics,nobel,prize,2008,predictions

Economics Nobel Redux

What I'm walking away with with from all of this is that the award was a lot more Hayekian than I thought at first glance, and that I'm getting more suspicious of that position for a thou-doth-protest-to-much reason.

I was barely exposed to Hurwicz in graduate school, and not at all to Myerson and Maskin, so I'll defer to others.

Mike Moffat didn't exactly call it, but he got pretty close.

Of course, Ladbroke's and InTrade basically had no clue on this one; thin markets strike again.

Marginal Revolution has 5 posts up about the winners and their work (Tyler's short summary, Alex's long summary, and Tyler's largely biographical pieces on Hurwicz, Maskin and Myerson).

Among economists, extensive appreciations have been done by Alex Tabarrok in ReasonOnline, Lynne Keisling at Knowledge Problem, and in The Wall Street Journal by Peter Boettke.

A journalists appreciations is available in  The New York Times.

Arnold Kling has a harsh analysis at EconLog.

Greg Mankiw has a little trivia (which turns out to be one too low).

Also see Stationary Bandit, Kids Prefer Cheese, and Austrian Economists (here, here, here, and here).

2007 Nobel Prize

The winners are Leo Hurwicz, Eric Maskin and Roger Myerson.

The committee went towards micro again, and a lot of predictors (myself included) missed by a country mile. I wonder if this is because the papers are too hard, and more people gloss over them than they should (I've been guilty of that, although in this particular area underexposed might be a better description of my background).

For my part, I'd forgotten about Hurwicz. The awareness on the part of the committee that there is seminal micro out there from the 50s and 60s that has gone unrewarded means that Lionel McKenzie (and maybe even Uzawa) ought to go much higher on everyone's list in the future.

As for Maskin, I thought he was too young (and not important enough). I C-listed him the other day.

And Myerson wasn't even on my radar screen, other than as a name on reading lists.

There is a short description of their contributions here, and a longer one here.

Nobel Gut Feeling

Alchian and possibly also Demsetz have been on my mind a lot this weekend. I'm not much for hunches, but there it is.

FWIW: They don't even show up on Ladbrokes' list of Nobel odds, or those at InTrade. Me thinks, A&D notwithstanding, that those markets are way too thin.

4th Annual Nobel Predictions

My money is still on Bhagwati.

But, I've been wrong the last 3 years. (That's OK, I was wrong for 8 years before Vernon Smith got one - although everyone thought I was crazy when I said that in 1994).

I haven't had time to poke around and see what others are predicting (here's Thomson, here's Mankiw's). My A list is:

• Alchian
• Barro
• Baumol
• Bhagwati
• Cass
• D. Diamond
• P. Diamond
• Dixit
• Fama
• French
• G. Grossman
• Hall
• Hansen
• Harberger
• Hart
• Helpman
• Holmstrom
• Jorgenson
• Kreps
• Krugman
• Mortenson
• Obsfeldt
• Pissarides
• Rogoff
• P. Romer
• Sargent
• Shell
• Sims
• Thaler
• Tirole
• Tullock
• Williamson

My B list is:

• Bernheim
• Card
• Feldstein
• Goldin
• S. Grossman
• Krueger
• Milgrom
• Peltzman
• Wilson

My C list is mostly younger folks:

• Demsetz
• Maskin
• Murphy
• Newey
• Rajan
• Rabin
• P. Romer
• Shleifer
• Shiller

Obviously, there are a lot of combinations of people from different lists who are possible, but this ought to cover the next 10 years nicely (although everyone forgot about Robert Aumann a few years back).

A Blast from the Past - 2006 Nobel Prize

Edmund Phelps has been awarded - solo - the 2006 Nobel Prize in Economic Science.

I'm thrilled.

I think Phelps has been somewhat of a forgotten name. But ... I for one still talk about him in Principles of Macroeconomics every semester.

Phelps, you see, is the guy who first recognized (in 1966) that the Phillips curve - as propounded by Keynesians in the 1960s - had to be wrong.

That was 2 years before Friedman made that point in his speech to the AEA, and 6-7 years before Lucas was actually able to show theoretically how the Phillips curve could be both empirically observable and yet meaningless for policy.

More later ... still catching up from the last 2-3 weeks.

Nobel Prize Predictions

It's time for 2006 Nobel Prize in Economic Science predictions.

Not much has changed from the last two years: I think Jagdish Bhagwati is at the top of the list.

My predictions last year were much more fully fleshed out - and amazingly I had Schelling ranked second (even though I am not well-versed in any of his work).

Tullock and Harberger are possibilities if the committee decides to make a statement before they pass on, but this seems doubtful.

Finance is even more due this year than last. I think Fama is a good bet there, although he won't win solo. But who to pair with him? I wouldn't be surprised if it is Thaler, and they call them bookends.

Lastly, I have a soft spot for Dale Jorgenson.

The rest of my short list is Dixit, Helpman, Grossman, Krugman, Baumol, Phelps, Williamson, Sims, Diamond, Cass, Shell and Romer.

OK. Now I've committed my thoughts to e-paper without looking at the predictions of others. Time to go browse the blogosphere.