A Nobel Economics Prize for the Long Run

Share

The winners of the 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel are William D. Nordhaus and Paul M. Romer who included important scientific ideas in their modeling of future economic growth.

The Royal Swedish Academy of Sciences said they had addressed "some of our time's most basic and pressing questions" about sustainable growth.

"It's an ingenious pairing", said David Warsh, author of the 2007 book Knowledge and the Wealth of Nations about the award.

The economics prize is the last of the Nobel awards to be announced this year.

"I think its really anomalous in the United States, this degree of hostility to environmental policy. all I can do is hope that we get through this without too much damage", he told reporters at Yale, after teaching a class as normal despite finding out earlier he had won from his daughter.

In the 1970s, Nordhaus, already alarmed by the threat of global warming, began working on potential solutions. Economic models he has developed since the 1990s are now widely used to weigh the costs and benefits of curbing greenhouse gas emissions against those of inaction.

And Romer's work also has implications for policies relating to climate-change mitigation.

At a press conference announcing the 2018 Nobel Prize in Economic Sciences. laureate Paul Romer suggested that it is entirely possible for humans to produce carbon.

Many economists have since endorsed the concept of taxing carbon and using this financial lever to influence societal behaviour.

"They have taken macroeconomics to a global scale, to tackle some of the world's biggest problems", said the Nobel Prize committee. The time for baby-step carbon taxes should probably be over. Many Republicans in Congress have also expressed skepticism about whether or how much human beings are contributing to global warming and whether the USA government ought to take steps to address it. The climate then affects economic growth, and the cycle repeats. His vision was to model new ideas as goods and services.

Romer is Rochester's third economics Nobelist.

Last year, the honor went to USA economist Richard Thaler, a co-founder of the so-called "nudge" theory, which demonstrates how people can be persuaded to make decisions that leave them healthier and happier. Last year's economics prize went to alumnus Richard Thaler '74 (PhD), the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the Booth School at the University of Chicago and one-time faculty member at what is now Rochester's Simon Business School.

Share