By Prarthana Mitra
The 2018 Nobel Memorial Prize in Economic Science was awarded on Monday to American economists William D. Nordhaus and Paul M. Romer for introducing environmental change and technological advancement as long-term determinants of economic growth.
The 50th Nobel Prize in Economics was shared between Romer and Nordhaus, both shortlisted by the Nobel Committee for a long time. The official statement by the jury stated that the joint prize highlights the importance of international cooperation to achieve a long-term economic growth. “The message is that it’s needed for countries to cooperate globally to solve some of these big questions,” said Goran K. Hansson, secretary general of the Royal Swedish Academy of Sciences.
Why is their work significant?
Besides pioneering the economic analysis of climate change, Nordhaus, a professor of economics at Yale University, has been a life-long advocate for carbon taxation to reduce emissions. He was awarded the most coveted award in his field, on the same day the United Nations released a climate report, citing Nordhaus’ work. It warned the panel of dire consequences from climate change and urged governments to respond to global warning with greater urgency.
While Nordhaus was cited for his work on environmental and climatic change, Romer’s work focused on the economic impact of technological changes and the role of ideas in fostering economic growth.
After the announcement, Romer, a professor of economics at New York University, said that he shared Nordhaus’s optimism that public policy can be improved. “One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist,” he said. “Humans are capable of amazing accomplishments if we set our minds to it.”
Inspired by the acceleration in economic activity after the Industrial Revolution, Romer sought to explain how technological advances in the eighties drove economic growth. He urged policymakers to foster technological innovation by investing in research and development, patenting intellectual property for public use.
Strongly against dressing up political beliefs in difficult science and math, Romer became the chief economist of the World Bank in 2016, before resigning 15 months later convinced that the bank’s positive evaluation of Chile’s economic policies was politically influenced.
The recipient of the Economics award last year was Richard H. Thaler for his pioneering work in establishing that human behaviour is irrational and in defiance of economic theory.
The complete list of Nobel laureates this year
James P. Allison and Tasuku Honjo shared the Nobel Prize in Medicine 2018 for a discovering a way to harness the inbuilt immune system to combat cancer cells. Arthur Ashkin, Gérard Mourou and Donna Strickland won the Nobel Prize in Physics for developing tools made of light beams. Strickland became the third woman in history to win the physics prize. The Nobel Prize in Chemistry went to Frances H. Arnold, George P. Smith and Gregory P. Winter for tapping the power of evolutionary biology to solve chemical problems.
Congolese gynaecologist Denis Mukwege and Social Justice Warrior Nadia Murad received the prestigious Nobel Peace Prize “for their efforts to end the use of sexual violence as a weapon of war.”
Prarthana Mitra is a staff writer at Qrius.