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2 American Economists Win 2018 Nobel Memorial Prize In Economics

19 hours ago
Originally published on October 8, 2018 8:02 am
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NOEL KING, HOST:

This morning, the winners of the Nobel Prize in economics were announced. The prize will be split by two economists, William Nordhaus and Paul Romer. Nick Fountain from our Planet Money podcast is with me now. Good morning, Nick.

NICK FOUNTAIN, BYLINE: Happy econ Nobel day.

KING: (Laughter) Before we get to the winners, we should clarify something, or I know we will get emails from economists. It's not actually the Nobel Prize in economics, right?

FOUNTAIN: Yes. I'm going to try to pronounce this right now. It's the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

KING: Yeah, it's interesting. One of the economists, William Nordhaus, is known for talking about the economy and climate together.

FOUNTAIN: Right. He's an economist at Yale, and he's been thinking about how the economy interacts with the environment and climate for decades now. This morning, I called up Justin Wolfers. He's an economics professor at the University of Michigan, and he explained his work to me.

JUSTIN WOLFERS: The key insight is, if you leave markets alone, you won't get good outcomes on the environmental side. And the reason is simple. Every time you fire up your factory, you're thinking about your profits. But at the same time, you're stinking up my - greenhouse gases.

FOUNTAIN: And so Nordhaus's work is about how we need incentives to push us in the right direction, like - things like carbon tax, for instance.

KING: Really interesting choice. And how about his co-winner, Paul Romer? What is he known for?

FOUNTAIN: Right. Quick aside here. Paul Romer works at NYU. He got a couple of calls this morning, but he did not answer them.

PAUL ROMER: I got two phone calls this morning, and I didn't answer either one because I thought it was some spam call. So I wasn't (laughter) - I wasn't expecting the prize.

FOUNTAIN: Anyways, his work is about growth and why economies grow. And his question is, will they grow forever? And Justin Wolfers explained to me that his research says it's ideas that make economies grow.

WOLFERS: Paul's insight is that the infrastructure for creating new ideas is the engine room of economic growth. So we need to pay attention to patents, the number of scientists that are out there, the incentives to do science. And as long as we can keep generating new ideas, we can keep generating economic growth.

FOUNTAIN: So in both of these choices, in Nordhaus and Romer, the Nobel committee this year is saying this work about making governments think about how to make - have the right incentives for people to do things that we want them to do to prevent climate change, to continue to grow - that stuff is really important.

KING: Nick, it seems worth noting the economics Nobel is celebrating its 50th year this year. And yet only one woman has ever won the prize.

FOUNTAIN: Right. A lot of people thought that we might have another woman this year. The only woman is Elinor Ostrom. She won the Nobel in 2009. And, you know, 50 years is a long time for only one woman.

KING: NPR's Nick Fountain from our Planet Money team. Nick, thanks so much.

FOUNTAIN: Thanks, Noel. Transcript provided by NPR, Copyright NPR.