Economics Nobel no easy pick

2008-10-13 09:35

Stockholm - If history is any guide, this year's Nobel economics prize will award the developers of economic theories that have had the time to take root, grow and prove resilient.

The past also indicates that Monday's winner will probably be an American male who will have done the bulk of his work several decades ago, not someone who has analysed issues related to the financial meltdown that is now throwing capitalism into turmoil worldwide. Also, no woman has ever won the economics prize from the Nobel Foundation since it was first handed out in 1969.

The award, known as the Nobel Memorial Prize in Economic Sciences, is the last of the six Nobel prizes announced this year and is not one of the original Nobels. It was created in 1968 by the Swedish central bank in Nobel's memory.

Last year, Americans Leonid Hurwicz, Eric S Maskin and Roger B Myerson shared the award for developing a theory that explained how buyers and sellers could maximise their gains from a transaction. The work on that theory began in 1960.

And Americans have had a virtual stranglehold on the award. The last non-American to win it was Canada's Robert A Mundell in 1999.

So far, speculation has centred on Eugene Fama, an economist at the University of Chicago, for the efficient-market hypothesis that he created in the 1960s. Fama argues market-set asset prices accurately reflect all of the available information that investors need to see.

Hubert Fromlet, a professor of international economics at the University of Jonkoping, predicted that a macroeconomist would win the prize.

Speculation

He also cited candidates such as Harvard professor Robert Barro, Stanford's Paul Romer, Christopher Sims of Princeton and Thomas Sargent of New York University.

Should the jury step out of line with previous decisions, "Frenchman Jean Tirole for example, should already today be a very hot Nobel prize candidate, despite his young age", Fromlet said of the 55-year-old scientific director of the Toulouse-based Institut d'economie Industrielle.

His research has focused on industrial organisation, game theory, finance and banking as well the psychology of economics.

Others who have figured in the speculation leading to Monday's announcement include Kenneth French, an American economist at Dartmouth, known for his own asset pricing research done with Fama.

American Lars Peter Hansen has been tipped, too, for his role as the developer of generalised method of moments - a statistical method for obtaining estimates of parameters of statistical models.

Fromlet said another contender is Jagdish Bhagwati, a noted proponent of free trade and critic of opponents of globalisation from Columbia University.

Other potential candidates whose names have been bandied about include arbitrage pricing researcher Stephen Ross and Assar Lindbeck in Sweden who has researched China's reforming economy.

- AP