'A Nobel For the Big Big Questions'

In a rather critical analysis of the 2024 Economics Nobel, commentator Noah Smith has questioned the prize's shift back to "big-think" theories. He argues that Acemoglu, Johnson, and Robinson's (the winner of the 2024 Economics Nobel) influential work on institutions and development, while intriguing, lacks robust empirical validation. From his blog: The science prizes rely very heavily on external validity to determine who gets the prize -- your theory or your invention has to work, basically. If it doesn't, you can be the biggest genius in the world, but you'll never get a Nobel. The physicist Ed Witten won a Fields Medal, which is even harder to get than a Nobel, for the math he invented for string theory. But he'll almost certainly never get a Physics Nobel, because string theory can't be empirically tested.

The Econ Nobel is different. Traditionally, it's given to economists whose ideas are most influential within the economics profession. If a whole bunch of other economists do research that follows up on your research, or which uses theoretical or empirical techniques you pioneered, you get an Econ Nobel. Your theory doesn't have to be validated, your specific empirical findings can already have been overturned by the time the prize is awarded, but if you were influential, you get the prize.

You could argue that this is appropriate for what Thomas Kuhn would call a "pre-paradigmatic" science -- a field that's still looking for a set of basic concepts and tools. But it's been 55 years since they started giving the prize, and that seems like an awfully long time for a field to still be tooling up. Meanwhile, making "influence within the economics profession" the criterion for successful research seems a little too much like a popularity contest. It's how you end up with prizes like the one in 2004, which was given to some macroeconomic theorists whose theory said that recessions are caused by technological slowdowns and that mass unemployment is a voluntary vacation.

In recent years, that looked like it might be changing. Often, the prize was given to empirical economists associated with the so-called "credibility revolution" -- basically, quasi-experiments. Those cases include Goldin in 2023, Card/Angrist/Imbens in 2021, and Banerjee/Duflo/Kremer in 2019. And when it was given to theorists, they tended to be game theorists whose theories are very predictive of real-world outcomes -- Milgrom/Wilson in 2020, Hart/Holmstrom in 2016, Tirole in 2014, and Roth/Shapley in 2012. Even when the prize was given to macro -- a field where validity is much harder to establish -- it was given to economists whose theories have seen immediate application to pressing problems of the day, such as Bernanke/Diamond/Dybvig in 2022 and Nordhaus in 2018. In other words, the recent Nobels have made it seem like economics might be becoming more like a natural science, where practical applications and external validity are the ultimate arbiter of the value of research, rather than cultural influence within the economics profession. But this year's prize seems like a step away from that, and back toward the sort of big-think that used to be more popular in the prize's early years.

Not a Nobel Prize

[Anonymous Coward]

Economics does not have a Nobel prize in the same way that Physics, Chemistry, Medicine etc do. What they have is "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel".

The distinction is important. Nobel prizes in physics and chemistry were dedicated to useful sciences. The Sveriges Riksbank Prize was designed to con people into thinking that economics was a science with the same level of rigor as physics or chemistry. Members of Nobel's family even complain about the misuse of his name in this. One called it "a PR coup by economists to improve their reputation".

https://web.archive.org/web/20... [archive.org]

Re:

[Retired Chemist]

It is true that it was not established by Nobel and has been criticized by his family, but it is run by the same people who award the other Nobel prizes. A good many of the prizes in the other fields (particularly medicine) have been given out for work that was later discredited. The committee is made of real people and is not infallible. That said, I do not think Nobel would have approved. He wanted his awards to allow the recipients to work free of financial constraints and to improve the world. It c

Re:

[Quantum gravity]

Here is the list of the 5 prices:
* Physics
* Chemistry
* Physiology or Medicine
* Literature
* Peace
And then there is the sixth prize in Economic Sciences in Alfred Nobel's memory. It wasn't in Nobel's testament, but was created in 1968 and has been awarded 56 times and is administered by the Nobel Foundation. All are celebrated in Stockholm, except the peace prize, which is celebrated in Oslo.

Regardless of what you think about the prize in economics, this year's winners research sounded pretty interes

Not a science

[algaeman]

Economics is religion, not science

Re:

[alvinrod]

Microeconomics can be empirically validated in some cases and many behavioral economists can develop and conduct empirical studies to validate their hypotheses. Macroeconomics on the other hand is more akin to sociology. Testing those theories is particularly impossible and many countries have been ruined applying ideas that are nonsense dreamt up by self-styled economists.

Econ more like psychology than biology

[Beeftopia]

Econ is more like psychology than biology. It deals with, at the base, why people's money-related and value-seeking behaviors are what they are. And "people" is a hugely varied group. There are a myriad pools of people, each controlling money and some component of value creation and consumption, and all the pools react to, and depend on, each other.

There is a new concept, "behavioral economics" which is less looking to apply equations, and more trying to be astute about human behavior. Nobel laureates have espoused behavior economics (Shiller, etc) and tried to move away from "mathiness".

Math supposedly suggests intellectual rigor, and less speculation. Econ is falls at the edge of the social sciences and natural sciences. But it's still about human behavior, which is more social science and less natural science.

Re:Econ more like psychology than biology

[ebh]

Very true. I love this one-sentence definition: "Economics is the study of desires."

It's like those people who want to go back on the gold standard. They complain that there's nothing supporting fiat currency; it's worth precisely what someone is willing to pay for it (by whatever mechanism). OTOH, what is gold worth? Precisely what someone is willing to pay for it!

Re:

[alvinrod]

You misunderstand why proponents of the gold standard wish to return to it. It has nothing to do with it being magically valuable and everything to do with an inability for a government to print more of it out of thin air. Ask anyone who has lived in a country that has undergone hyperinflation due to a government printing more fiat currency about how well that worked for everyone and they'll tell you why they might prefer a currency that cannot have its value robbed out from beneath them by clueless governm

Re:

[ebh]

[Honestly asking here.]

What's stopping a government from just reducing the amount of gold each unit of currency represents?

Also, ISTR that the US in particular couldn't go back on the gold standard because at current dollar-denominated prices, there isn't enough gold on earth to cover the amount of dollars in circulation.

study the wealth and poverty of nations

[oumuamua]

What other idiot studied this? Ah yes

The wealth and poverty of nations has been a preoccupation of economists since Adam Smith founded the discipline 250 years ago, when he wrote a book titled, The Wealth of Nations.

https://www.npr.org/2024/10/14... [npr.org] None other than the founder of modern capitalism & free markets Adam Smith, and Noah has the same last name, oh the irony

Sounds like Psychohistory

[Mirnotoriety]

The science economics of sounds a lot like Psychohistory from Isaac Asimov's Foundation series as rewritten by Adam Smith:

“In contemplating the principles which govern the collective actions of vast societies, one may perceive that the behavior of large populations is not wholly subject to the caprice of individual will, but rather, follows certain general patterns which, when examined over extended periods of time, become discernible and even susceptible to calculation”

Bigger Problems

[Roger W Moore]

The physicist Ed Witten won a Fields Medal, which is even harder to get than a Nobel, for the math he invented for string theory. But he'll almost certainly never get a Physics Nobel, because string theory can't be empirically tested.

The physics nobel has far more significant problems than that - and indeed it is hard to see this as a problem because string theory may well turn out to just be a mathematical model with zero basis in reality i.e. not physics at all so the Fields Medal seems far more appropriate since the maths is real regardless of whether it describes the physical universe.

The problem the nobel prize faces is increasinlg irrelevance since it cannot be awarded to more than three people and an increasing amount of physics is now being done by large collaborations that are ineligible for it. For example, while Higgs won the prize for the theory there will never be a nobel prize awarded for the discovery of the higgs boson, arguably one of the biggest discoveries in recent physics, simply because the discovery was made by two large collaborations. Astrophysics is going the same way with results increasingly coming from collaborations.

Indeed, one could start to think that the problem has got so bad that they have now started awarding the physics prize for computer science...