We’re now very close to the Nobel announcement which is expected Monday morning. Tyler Cowen favors Williamson and Tirole because they might want “to bring it down to earth and also they might wish to choose a Frenchman.” Peter Klein favors a prize for organizational economics and, I have a hunch, favors Williamson. French and Fama are perennial favorites. The betting markets include names like Feldstein, Barro (the favorite in the Harvard Nobel Pool), Bhagwati, and Sargent. Thomson Reuters likes Alchian and Demsetz (property rights & the theory of the firm) along with Feldstein and the combination of Hansen, Sargent and Sims for econometrics. TOTM readers will know I’m also pulling for Alchian and Demsetz to take home the Prize this year, or alternatively, a UCLA economics prize on property rights, the theory of the firm and contract economics to Alchian, Demsetz and Klein (I make the citation-based case here).
One last point. Much of the commentary around the blogs has focused on the how the current financial crisis might impact the selection process or what signal given the Prize to another set of theorists would send. I get that. I have no doubt that the selection committee worries about those types of signals. So, while elegant theory and sophisticated econometric modeling are very important and I promise not to complain if any of the names above win the Prize, I think a very healthy and timely message to be sent to economists is that work explaining economic phenomena in the real world is highly valued by the profession. Sending the message to young economists that rewards can be had not only by elegant mathematical theory and econometrics (we know that already), but also the kind of economics that require the economist to get his hands dirty to explain important real world economic puzzles and problems, might be good for the profession as a whole. As Armen has described his approach to doing economics: “It’s like painting a house or working as a carpenter. It’s the same thing – something comes up and you deal with it. It’s pretty straightforward, nothing romantic.”
