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| The 2018 Nobel Prize winners for economic sciences |
The 2018 Nobel Prize for economic sciences shared by William D. Nordhaus and Paul M. Romer
The 2018 Nobel Prize in Economic Sciences was
awarded on Monday to a pair of American economists, William D. Nordhaus from
Yale University, US, and Paul M. Romer from New York University, US, for
their work highlighting the importance of government policy in fostering
sustainable economic growth. Mr, William won this prize for “integrating
climate change into long-run macroeconomic analysis”. And Mr. Romer won
this award for integrating technological innovations into the long-run
macroeconomic analysis in a market economy”.
The Royal Swedish Academy of Sciences’
backgrounder on the prize wrote “This year’s prize rewards the design of
models and methods to address some of the most fundamental and pressing
questions of our time, involve the long-term development of the global economy
and the well-being of its citizens. Paul M. Romer's new tools to understand how
long-term technological change is determined in a market economy, William D.
Nordhaus has pioneered a framework for understanding how the economy and
climate of our planet depended on each other Both Romer and Nordhaus emphasize
that the market economy, while a powerful engine of human development, has
important imperfections and their contributions have thus offered insights into
how government policy could potentially enhance our long-run welfare. Looking
forward, the combined work by the Laureates offers the research community an
opportunity to address long-run issues around climate, energy supply, and
sustainability, by studying government policy together with the endogenous
technological change in the global market economy.”
Economists had traditionally treated the
arrival of new ideas as manna from heaven: obviously important but beyond the
control of public policy. The announcement of the award came on the same day
that a United Nations panel on climate change released a report warning of dire
consequences from climate change and urging governments to respond to the
problem with greater urgency.
Goran K. Hansson, secretary general of the
Royal Swedish Academy of Sciences said at a news conference following the
announcement. One problem today is that people think environmental protection
will be so expensive and difficult that they want to ignore the problem and
pretend it does not exist. Humans are capable of gaining amazing achievements
if we put our minds into it. The message is that it is needed for countries to
cooperate globally to solve some of these big problems.
Mr. Nordhaus studied economic growth and
natural resources at the beginning of 1970. He graduated from Yale and then
earned a doctorate in economics from the Massachusetts Institute of Technology.
That same year, he returned to Yale as a member of the economics faculty, and
he has remained there ever since. He became an early advocate for the taxation
of carbon emissions. He developed the integrated assessment model and created
the DICE (Dynamic Integrated Climate-Economy) and RICE (Regional dynamic
Integrated Climate-Economy) models to determine efficient paths for coping with
climate change. These models were the foundation for integrated assessment
models used by the Intergovernmental Panel on Climate Change to investigate how
fossil fuels burnt for economic use give off carbon emissions that raise
atmospheric concentrations of carbon and boost global temperatures, in turn
causing economic harm.
Mr. Romer is the son of Roy Romer, a former
governor of Colorado. He earned a doctorate in economics from the University of
Chicago in 1983 and then began his career as an academic. Mr. Romer sought to
explain the role of technological advances in driving economic growth. His work
was inspired by a desire to understand the remarkable acceleration in growth
that began with the Industrial Revolution. He argued that national differences
in such public policies helped to explain differences in economic growth rates.
In particular, Mr. Romer’s work elucidated the value of participating in larger
communities. While a given part of the world might be able to meet its own
material needs, larger communities tend to produce more ideas, which can then
be broadly shared. Mr. Romer’s big idea was to argue that policymakers could
foster technological innovation, for example, by investing in research and
development and by writing patent laws that provided sufficient rewards for new
ideas without letting inventors permanently monopolize those rewards.