Economists William Nordhaus and Paul Romer on Monday were declared as the winners of the 2018 Nobel Prize in Economics. The economists were awarded the prestigious prize for their researches on climate change and development—two areas of concern in the current global scenario, stated the Royal Swedish Academy of Sciences announcing the economics prize.
The committe said that Nordhaus was the first person to create a quantitative model that describes the global interplay between the economy and the climate. His model is now widespread and is used to examine the consequences of climate policy interventions, for example carbon taxes. Noting that human activity has contributed to the rapid increases in average global temperatures over the last 100 years, the Royal Swedish Academy of Sciences said that Nordhaus’ research showed how economic activity interacts with basic chemistry and physics to produce climate change.
"William Nordhaus's research shows that the most efficient remedy for problems caused by greenhouse gas emissions is a global scheme of carbon taxes uniformly imposed on all countries. The diagram shows CO2 emissions for four climate policies according to his simulations," the academy said.
At the same time, Romer’s research shows how the accumulation of ideas sustained long-term economic growth. He demonstrated how economic forces govern the willingness of firms to produce new ideas and innovations, the academy said. "Romer’s research laid the foundation of what is now called endogenous growth theory. The theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity."
Nordhaus winning the much coveted prize does not come as a surprise as researches in climate and development had emerged as the lead contenders for the Nobel Economics prize. A Yale University professor known for his research on the economic consequences of global warming, Nordhaus bears two of the typical characteristics of a Nobel Economics laureate: he's a man, and he's American, like 70 per cent of previous prizewinners.
At 77, he's a decade older than the average winner.
It was also widely speculated that a macro-economist would win the prize this year and Romer's name was doing the rounds this year. The professor of economics at the Stern School of Business at New York University, he was the chief economist and senior vice president of the World Bank until January 24.
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With the announcement of the Nobel Economics prize, the 2018 Nobel season will wind up. It is to be noted that there was no literature award this year—first time in 70 years—as the Swedish Academy was mired in a scandal.
The Nobel Economics prize was created by the Swedish central bank "in memory of Alfred Nobel" and first awarded in 1969, unlike the other prizes which were created in his last will and testament and first awarded in 1901.
Last year the prize went to US economist Richard Thaler, a co-founder of the so-called "nudge" theory, which demonstrates how people can be persuaded to make decisions that leave them healthier and happier.
The Nobel Economics prize is celebrating its 50th anniversary this year. Created in 1968 to mark the tricentenary of the Swedish central bank, the Riksbank, it is the most prestigious prize an economics researcher can win. Nobel's will stipulated that the prizes shall go to people who have worked to create "a better world".
The Nobel Economics prize consists of a diploma, a gold medal and a cheque for nine million kronor (around $1 million, 863,000 euros) and will be handed over at a formal ceremony in Stockholm on December 10.
