A number of journalists all over the globe commented the day before yesterday that this year’s winners of the Nobel Prize in economics – if we use this less exact term – were not really the expected first choices. In my opinion, they were actually very strong candidates. In my own forecasts,
I had Chris Sims among the “top 10” candidates and Thomas Sargent among the “top 20” candidates, i.e. on my two narrow lists. This judgment was based on the strong role that methodological breakthroughs use to have in the evaluation process of 250-300 candidates. And Sims and Sargent have to be considered as pioneers in differentiating cause and effects in macroeconomic developments.
Figuring out how new policies affect the economy both in the shorter and longer run are crucial to policy decisions. The organization of historical data in this context – managed by the two laureates – is certainly a masterpiece. Sure, many times expectations are rational as Sergent assumes. But I also would like very much that “bounded rationality” – as the great Herbert Simon once put it – can become an integrated part of future economy modeling.
Looking four years back, this highest economic award went twice to macroeconomic research (Krugman, Sims/Sargent), one to microeconomic issues (Diamond/ Mortensen/Pissarides), and once to microeconomic results (Williamson) together with an interdisciplinary approach (Ostrom).
What will happen next year?
I could imagine that focus will be put on corporates, finance/banking, econometrics, economic growth or economics with links to other sciences like psychology, health or the environment. However, I need much deeper reflections to produce my next list of candidates and – hopefully – to find again the relevant research areas and economists that may be awarded.