The Sveriges Riksbank Prize In Economic Sciences & What It Tells Us About 'The Meaning Of Economics'
Economics, unlike chemistry or literature has a definitional dilemma as the question of what economics is a study of varies. Decision-making? Trade-offs? Society? Money? There is an unmistakable unclear categorisation of what economics is. However, the rough understood definition of economics can be tracked over time by looking at two distinctive time periods and the Nobel Prize winners that lie within them.
The first identifiable period is from 1969 to the late 1990s. Jan Tinbergen and Ragnar Frisch were the controversial inaugural winners of the new award. Many accused the award of soiling the Nobel family name, and others said that it was an unnecessary opportunity for economists to improve their reputation. Nonetheless economists were selected and awarded every year since, and there is an identifiable trend within this first period.
The majority of awards given in this time period were for the more classical economists who conducted their work in the fields of accounting, growth studies and financial markets. This aligns fairly well with the Reagan-Thatcher world order of the time. Classical economics was the status quo, with 1974 winner Friedrich Von Hayek’s book ‘The Road to Serfdom’ being cited by Thatcher many times.
Economics was about numbers and the macroeconomic objectives – employment, inflation, growth and trade. This paints economics and ergo the study of economics as a bit heartless and cold. Economists generally are fairly unknown, but when looking back at the winners in this period, it’s difficult to idolise them in the same way as the chemists or peacemakers. Economics here has strict boundaries and limits, and is focused on “the economy” and not the people living within it.
The second period begins in 2002 with Daniel Kahneman being awarded the prize. The turning point being the victory of Daniel Kahneman – not an economist but a psychologist. Kahneman made his mark by introducing the field of behavioural economics to the wider world. This redefined what it meant to be ‘an economist’ and fundamentally changed the game. His colleague Richard Thaler went on to win an award in the same field 10 years later.
Although Kahneman’s win didn’t start a trend per se, it did open the door for more academic diversity and a greater focus on people and development. Angus Deaton, Elinor Ostrom, Esther Duflo, Abhijit Banerjee and Michael Kremer all received awards for their work in poverty studies and local resource management. Suddenly, the field of economics no longer concerned itself with arbitrary figures but with the lives of people. This defined a clear detachment from the first period.
It is also important to point out that this second period is also differentiated by the status of the winners; although Americans are by far the most dominant nationality of awarded recipients, it’s in this second period that we have the only two female winners – the aforementioned Elinor Ostrom and Esther Duflo. Of all 89 economics prizes awarded, 2.2% of the winners are women. Compare this to the most women-dense category of Peace, in which 16.5% are women.
Evidently, there are comments to be made about how women are recognised in academia generally, but economics comes off the worst when viewed through this lens. It’s not as if women are less skilled at economics than men, but due to the intrinsic link between mainstream economics and the public, political sphere – a sphere that has historically been dominated by men; the statistics here aren’t surprising.
The study of economics has changed, branches of financial and monetary economics do still exist and are being meticulously studied and innovations are constantly being made in those fields. However, the impact of these branches on people is perhaps negligible. The trend of recent Nobel Prize winners indicates a shift towards economics being a study of ‘how to improve people’s lives and wellbeing’. An ethos embodied by economists such as Esther Duflo. Fundamentally, this is a good thing.
By decentring off of the older negative stereotypes, it brings economics in line with medicine and peace and counters the original criticisms of the prize being a mere ego-inflater. This is not advocating for purely awarding economists that work in these fields but a call for open-mindedness about what the study of economics is. Economics should be accessible to all and used to better people’s lives. And although the Nobel Prizes aren’t prescriptive in defining economics, the recent trends indicate that it’s moving in the right direction.