The former governor of the Reserve Bank of India and a string of American
academics are among potential candidates for the Nobel prize for economics, due
to be announce
d on Monday in Stockholm.
The 9m Swedish kronor (£848,091) prize is not among the Nobel
Foundation’s official awards for literature, peace, medicine, physics and
chemistry but was established separately by Sweden’s central bank, Sveriges
Riksbank, in memory of the Swedish inventor Alfred Nobel.
The Swedish Academy of Sciences will announce the Sveriges Riksbank prize
in economic sciences in a climate in which economists – and other experts more
generally – are under pressure from rising populism, while neoliberal
economics, advocating free markets, individualism and minimal state
intervention, is increasingly discredited.
There have been 78 previous winners of the cash prize and medal which has
become a significant honour for economists since it was initiated in 1968.
Women are significantly underrepresented compared with some of the other Nobel
prizes, such as those given for peace or literature. The American political
economist Elinor Ostrom, who died in 2012, remains the only woman to have won
the award. She shared the prize in 2009 with fellow American academic Oliver
Williamson for her work exploring how people manage collective resources.
The prize was won last year by UK-born Oliver Hart of Harvard University
and Bengt Holmström of the Massachusetts Institute of Technology for their work
on contract theory, covering a range of issues from executive pay to
public-private partnerships.
The decision-making committees choose candidates in secret, with details
of the process for each round kept under wraps for 50 years. However, the
research company Clarivate Analytics has come up with a list of potential
candidates based on analysis of academic citations.
Colin Camerer and George Loewenstein
The California Institute of Technology’s Camerer and the Carnegie Mellon
University’s Loewenstein may win for their research into behavioural and
experimental economics.
The academics are pioneers in the field of behavioural economics, with
their research focusing on the connections between economic decisions,
neuroscience and psychology.
Their analysis includes examinations of why people might make risky
investments, the links between emotions and decision-making, and how markets
might be susceptible to price bubbles.
The professor of economics at Stanford University in California could win
the prize for his analysis of worker productivity, studies of recessions and
unemployment.
His work is particularly important in the wake of the financial crisis,
as the global economy lurched into reverse before starting to recover – which
still poses problems for governments and central banks to this day.
His recent work has shown that during a recession, unemployment does not
increase because of a sharp rise in companies cutting jobs. Instead, it rises
because jobseekers require longer to find new work.
Michael Jensen, Stewart Myers, Raghuram Rajan
The group of academics are singled out for their contributions to the
study of decisions in corporate finance, including the complex factors behind
the choices of individuals and organisations.
Jensen is professor of business administration at Harvard University and
has focused his research on corporate governance, executive pay and incentives.
Myers is the Robert Merton professor of finance at the MIT Sloan School
of Management. His research focuses on the valuation of assets and corporate
finance, as well as the government regulation of business.
Rajan is the former governor of the Reserve Bank of India, having left
the central bank last year to become professor of finance at the Booth School
of Business at the University of Chicago.
A former chief economist and director of research at the International
Monetary Fund, he is interested in economic development, banking and corporate
finance.
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