The “Nobel Prize” in economics and signaling

You can’t read far in any student economic text or article without noticing that any writer seems to rejoice singling out the work (or even opinion) of any economist who has won the…..are you ready for it?…… “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.” Usually just written as “Nobel Prize winning economist” or “Nobel Laureate so and so,” the prize is purposefully NOT another Nobel Prize per hard sciences and, particularly and ironically, “peace” sanctioned by the dynamite king himself, Nobel. (For this post, we’ll leave aside the absurd political incursion into US Presidential politics that was Obama’s Nobel peace prize. Keep those drones-a-killing, buddy.)

Economist and historian of science Philip Mirowski’s work focuses on the epistemology of sciences and the institutional and historical forces that influence what becomes accepted practice and wisdom in the sciences. He gives a brief and informative interview here about work he is doing on political forces that motivated the creation of this prize by the central bank of Sweden and what role the bank’s struggle for political independence, in the context of the Swedish welfare state and other social forces, plays in its overwhelming choice of various neoliberal and libertarian-leaning economists as the overwhelming recipients of its award. (While there are a few notable exceptions, such as the relatively heterodox economist Amartya Sen, the award has, for instance, gone to economists from the University of Chicago nine times and has never been awarded to a woman. Statistically significant?)

At the least, it seems that the Prize is a modest cudgel with which to further bludgeon one’s stubborn dissenting opponents with the soundness of neoliberal orthodoxy (Sen notwithstanding). This post was just inspired by my Ben Bernnake-and-friends-penned textbook “Macroeconomics” where, after entertaining some critics who question about the causes of higher European unemployment vs. the US in the 1990s returns finally to “Nobel Laureate Edward Prescott” who goes on to suggest that high income tax rates give people little incentive to work. This occurs in every text I have had. Sour grapes by contrarian old me? Maybe, but at best, the invoking of a prize given by a single central bank decided by a committee of five might warrant an occasional asterisk, but it seems to imply a bolstering of the legitimacy of an argument prima facie each time it is used.

In these days of financial, let alone economic illiteracy, we could probably all use a little more argument and reasoning and a little less celebrity prize endorsement in passing along what are, at most, opinions that, it may be argued, are well-supported by some calculus and subjectively chosen empirical data. Sadly, work like that being done by Mirowski and a modest number of others is on the brink of extinction at most universities, where simply learning your econometrics and derivatives and getting on with modeling some microfoundations will get you far and questioning the status quo in terms of how we even “know” what we think we know is just seen as a quixotic, and perhaps even sad, bit of deviance.

Today at UIC, Economic History (declared largely irrelevant by “1995 Nobel Laureate” Robert Lucas’ Lucas Critique?) and the History of Economic Thought (definitely irrelevant to most today for anything beyond curiosity’s sake) are only offered every other semester or so, depending on budget and scheduling issues. Who needs history when you’ve got microfoundations? I’m waiting for them to pop up again even now.

It will never cease to be important to contextualize received wisdom, and even new ideas, within the social and intellectual forces of the times, but the subtle message of the “Nobel” name-drop seems to be “don’t sweat it, this opinion has a NOBEL Prize!”

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About theunlikelyeconomist

theunlikelyeconomist is in the midst of the long slog to attain a PhD in economics.
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