Nobel Memorial Prize in Economic Sciences

Award nomination and selection process

According to its official website, the Royal Swedish Academy of Sciences "administers a researcher exchange with academies in other countries and publishes six scientific journals. Every year the Academy awards the Nobel Prizes in Physics and in Chemistry, the Prize in Economic Sciences, the Crafoord Prize and a number of other large prizes".

Each September the Academy's Economics Prize Committee, which consists of five elected members, "sends invitations to thousands of scientists, members of academies and university professors in numerous countries, asking them to nominate candidates for the Prize in Economics for the coming year. Members of the Academy and former laureates are also authorised to nominate candidates." All proposals and their supporting evidence must be received before February 1. The proposals are reviewed by the Prize Committee and specially appointed experts. Before the end of September, the committee chooses potential laureates. If there is a tie, the chairman of the committee casts the deciding vote.

Members of the Royal Swedish Academy of Sciences vote in mid-October to determine the next laureate or laureates of the Prize in Economics. As with the Nobel Prizes, no more than three people can share the prize for a given year; they must still be living at the time of the Prize announcement in October; and information about nominations, including the names of nominees and nominators and related investigations and opinions, cannot be disclosed publicly or privately for 50 years.

Like the Nobel laureates in physics, chemistry, physiology or medicine, and literature, each laureate in Economics receives a diploma, gold medal, and monetary grant award document from the King of Sweden at the annual Nobel Prize Award Ceremony in Stockholm, on the anniversary of Nobel's death (December 10).

Laureates

The first prize in economics was awarded in 1969 to Ragnar Frisch and Jan Tinbergen "for having developed and applied dynamic models for the analysis of economic processes". Three women have received the prize: Elinor Ostrom, who won in 2009, Esther Duflo, who won in 2019, and Claudia Goldin, who won in 2023. Goldin was the first woman to win the award solo.

Awards to non-economists

In February 1995, following acrimony within the selection committee pertaining to the awarding of the 1994 Prize in Economics to John Forbes Nash, the Prize in Economics was redefined as a prize in social sciences. This made it available to researchers in such topics as political science, psychology, and sociology.

Moreover, the composition of the Economics Prize Committee changed to include two non-economists. This has not been confirmed by the Economics Prize Committee. The members of the 2007 Economics Prize Committee are still dominated by economists, as the secretary and four of the five members are professors of economics.

In 1978, Herbert A. Simon, whose PhD was in political science, became the first non-economist to win the prize, for his work in the fields of economics and organizational decision making. Elinor Ostrom and James Robinson, who are also political scientists, won the prize in 2009 and 2024, respectively. Similarly, Daniel Kahneman, a professor of psychology and public affairs at Princeton University, won the prize for work in the field of behavioral economics.

Controversies and criticisms

Alleged misuse of the Nobel name

Critics argue that the prestige of the Prize in Economic Sciences derives in part from its association with the Nobel Prizes. Among them is Peter Nobel, a great-grandnephew of Alfred Nobel and a Swedish human rights lawyer. Nobel accuses the awarding institution of misusing his family's name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics. He explained that "Nobel despised people who cared more about profits than society's well-being", saying that "There is nothing to indicate that he would have wanted such a prize", and that the association with the Nobel prizes is "a PR coup by economists to improve their reputation".

Accusations of bias

Critics cite the apparent snub of Joan Robinson as evidence of the committee's bias towards mainstream economics.

Undue authority

In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would have "decidedly advised against it", primarily because "The Nobel Prize confers on an individual an authority which in economics no man ought to possess. This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally." Nevertheless, Hayek accepted the award.

Controversial prizewinners

• Friedrich Hayek – according to Samuel Brittan of the Financial Times, both the former Swedish minister for finance, Kjell-Olof Feldt, and the former Swedish minister for commerce, Gunnar Myrdal, wanted the prize abolished, with "Myrdal rather less graciously want[ing] the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman)." Relatedly, it has been noted that several members of the awarding committee have been affiliated with the Mont Pelerin Society.

• Milton Friedman – was awarded the 1976 prize in part for his work on monetarism. Awarding the prize to Friedman caused international protests. Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip he took to Chile during March 1975 (less than two years after the coup that ended with the suicide of its democratically elected President Salvador Allende). Friedman himself answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation and met with officials, including Augusto Pinochet, in Chile. Four Nobel Prize laureates – George Wald, Linus Pauling, David Baltimore and Salvador Luria – wrote letters in October 1976 to The New York Times protesting Friedman's award.

• Robert Aumann – 2005 prize to Robert Aumann was criticized by the European press for his alleged use of game theory to justify his stance against the dismantling of illegal Israeli settlements in occupied Palestine.

• Eugene Fama and Robert Shiller at the same time – 2013 prize to Eugene Fama, Robert Shiller and Lars Peter Hansen "for their empirical analysis of asset prices" was seen as contradictory because Eugene Fama's work is in support of efficient-market hypothesis meanwhile Robert Shiller's work is against the efficient-market hypothesis focusing in investors' irrational behavior.

Expansion of the scope

The 1994 prize to mathematician John Forbes Nash caused controversy within the selection committee. This resulted in a change to the rules governing the committee during 1994: the prize's scope was redefined as one of social sciences, and Prize Committee members were limited to serve for three years.

Alternative names

The prize's official name is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne). The prize has undergone many name changes due to controversy surrounding its status and nature:

General and cited references

• Nasar, Sylvia (1998). A Beautiful Mind. New York: Simon & Schuster. ISBN 0-684-81906-6.