Monday, 15 October 2012

And this year's Nobel Prize goes to...

Alvin E. Roth of Harvard University and Lloyd Shapley of the UCLA. But what did these scholars accomplish to gain this years' award? Who handles out the Nobel Prizes in Economics? And which countries provide the biggest number of laureates to the world? Read below to learn about the history, geographical distribution and other related facts.

Creation of the prize

While the original Nobel prizes were created by Alfred Nobel, the wealthy Swedish chemist and inventor posthumously, the Nobel Prize in Economics wasn't his idea. Rather, it was the Sveriges Riksbank - the oldest central bank of the world, celebrating it's 300th anniversary which proposed it's creation. (Technically, the bank only can issue banknotes since 1897, but it could issue so-called credit notes, serving essentially the same purpose.) Since 1969, Nobel Prizes of Economics (officially, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) are issued every year on December the 10th, along with other Nobel Prizes. The date commemorates the death of Nobel.

Nomination process

Since it was founded by a Swedish official authority, the Nobel Prize of Economics remains the only award fully associated with the original prizes. It it is awarded by a Committee, appointed by the Royal Swedish Academy of Sciences. It's members legally can be anyone, but in practice they are influential Swedish economists. Their decision is not the final one - they merely recommend laureates to the Royal Academy, which in turn chooses the laureates.
Predicting the outcome is a tricky business - while speculations about possible nominees surface months before the decision, they generally fail to predict the winner. This year, Reuters predicted that economists Anthony Barnes Atkinson and Angus S. Deaton would win the prize - in the end however, to totally different candidates emerged as winners.

Geographic distribution

44 Nobel Prizes of Economics have been issued so far, with a total of 71 individuals receiving the award. The data is decisive; even when counting scientists of dual affiliation by their original nationality (which somewhat distorts the data in favour of countries with less laureates), the overwhelming majority of economic Nobel prizes have been awarded to thinkers from the USA. This is naturally no coincidence - the United States of America is one of the biggest contemporary research hubs, and 9 out of 10 of the most prestigious Economics faculties (where most of these economists tend to work, teach and research) are located there.

Data source: Wikipedia, Graph Source: Schoolonomic

This year's nominees

Finally, we also must mention this years laureates - the American scientists Alvin E.Roth and Lloyd Shapley. I use the word scientist because the latter, Shapley doesn't consider himself an economist. "I consider myself a mathematician and the award is for economics. [...] I never,never in my in my life took a course in economics." 
The two scientists worked independently of each other, with Shapley using game theory to analyse the effectiveness of matching methods, starting in the 1950s. Three decades later, Roth applied his matchmaking approach (which was previously used in a scenario where 10 men and women were assigned in pairs so no-one would prefer their partner more than their spouse) to an allocating scheme, assigning U.S. doctors to hospitals (the U.S. National Resident Program). Later, the same algorithm was also used with kidney donors, high school students and theoretically could be used in all barter scenarios.  Congratulations to them - and thank you for reading (and hopefully commenting) on this article. 

Additional sources: Wikipedia

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