Roles of ideas and climate in growth earn duo economics Nobel prize

Nobel Economics 2018 Awarded To US William D Nordhaus Paul M Romer

William Nordhaus and Paul Romer win Nobel Economics Prize

Officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the economics prize is traditionally the final award of the Nobels to be announced each year. The model doesn't include climate tipping points, which have the capacity to be devastating, and it looks at keeping the climate below 3°C above pre-industrial levels, which we're already in line to hit.

"Many people think that dealing with protecting the environment will be so costly and so hard that they just want to ignore the problem", Romer said by telephone to the Swedish Academy.

The awarding of the prize proved timely, given it coincided with the release of findings from a United Nations panel warning of ominous consequences of climate change and calling on world leaders to respond with greater urgency.

The prize took Romer, of New York University's Stern School of Business, by surprise.

"The old Adam Smith supply and demand theories were expanded by his view on technology and it had a lot to do to explain the growth we've had in the last 25 years in the world", said Roy Romer.

Far from developing policies to reduce climate change, President Donald Trump has argued that the threat of human-produced climate change is a hoax concocted by China to hurt the American economy.

Two American economists at the forefront of work on climate change and the role of governments in boosting growth have been jointly awarded the prestigious Nobel Memorial prize for economics.

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In Nordhaus' case, the academy cited his pioneering development of an "integrated assessment model" representing "the global interplay between the economy and the climate". "Humans are capable of unbelievable accomplishments if we set our minds to it".

Paul Romer's research, on the other hand, shows "how the accumulation of ideas sustains long-term economic growth".

George Alessandria, the chair of Rochester's Department of Economics, says the members of the department are thrilled that Romer is being recognized with the Nobel Prize.

Neither economist directly engages the Austrian literature though Romer builds on Schumpeter's ideas on economic growth and has been compared to Hayek in his emphasis on knowledge as a driver of economic progress.

Last year's prize went to one of the founders of behavioral economics and finance, Richard H. Thaler of Chicago University, for his work studying human bias at a time when other economists still viewed people as rational actors.

The peace prize, which was announced in Oslo on October 5, was awarded to Denis Mukwege, a gynecologist from the Democratic Republic of Congo, and Nadia Murad, an activist and victim of war crimes.

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