Every year around this time, I repeat my prediction that Armen Alchian, Harold Demsetz, and Ben Klein will win the Nobel Prize for contributions to the theory of the firm, property rights, and transaction cost economics. I understand that last year’s prize makes this combination less likely, but I see no reason to deviate. I make the case for that combination, one that I think compares quite favorably to the more frequently discussed trio of Hart-Holmstrom-Tirole, in the linked post. One can also imagine an Alchian / Demsetz prize for narrowly grounded in their work on property rights.
As Armen’s long-time collaborator William Allen put it in his own letter to the Nobel Committee on Armen’s behalf:
Economics is a broad discipline in methodology, as the Committee is fully aware, ranging from detailed historical, institutional, legalistic description to totally abstract, arcane theory. All such approaches, techniques, and emphases are appropriate. But there is much specialization among the members of the fraternity. And, increasingly, the profession has dealt in rigorous, elegant manipulation, even when the work is purportedly empirical—and even when the substantive results hardly warranted such virtuoso flair. Professor Alchian is a splendid technician, and he has contributed significantly and conspicuously to general “theory.” But, in contrast to many, he has always appreciated that the final payoff of Economics is elucidation of the real workings and phenomena of the world. I know of no one at any time who has had a finer sense of how to use economic analytics to explain the world. Sometimes the explanation requires involved, complex analysis, and Professor Alchian does not fear to use the tools which are required; what is uncommon is his lack of fear in using the MINIMUM tools which are required. In large part, his peculiar genius (the word is used advisedly) is to make extraordinarily effective use of elemental, and often elementary, techniques of analysis. And a host of people—many of whom are now in strategic positions in universities, in government, in the legal system, in the world of business and finance—have enormously benefited from the tutelage of Professor Alchian. … I present Armen Alchian as a giant—a giant who, because of his lack of pretension, is easily overlooked by laymen and even by some supposed professionals—who has greatly honored his profession and uniquely contributed to its usefulness. He would grace the distinguished fraternity of Nobel Laureates.
Indeed. See also Fred McChesney’s entry on Alchian’s pathbreaking contributions to economic science is available here, and David Henderson’s entry on Alchian in the Concise Enyclopedia of Economics here.
Thomson-Reuters also adds Kevin M. Murphy (another Bruin, at least as an undergraduate!) to their “Watch list” this year, which is also a splendid idea.
Gordon Tullock remains, along with Armen, at the very top of the list of the most deserving.
I’m seeing a lot of predictions for Thaler / Schiller. That would be the prize that least surprises me.