Monday, October 14, 2013

Nobel(ish) Prize

Krugman on the Econ Nobel:

It’s an old jibe against economics that it’s the only field where two people can win the Nobel for saying exactly the opposite thing; even the people making that jibe, however, probably didn’t envisage those two guys sharing the same prize, which is kind of what happened here.

But I am actually fine with the prize. Fama’s work on efficient markets was essential in setting up the benchmark against which alternatives had to be tested; Shiller did more than anyone else to codify the ways the efficient market hypothesis fails in practice. If Fama has said some foolish things in recent years, no matter — he did earn this honor, as did Shiller. As for Hansen, his work involves econometric methods on which I have no expertise at all, but I’ll trust the experts who consider it great work.

So, all good — and you actually have to admire the prize committee for finding a way to give Fama the long-expected honor without seeming as if they are completely out of touch with everything going on around them.