The current global economic crises are unlikely to colour the Nobel economics award choice this year, but research on how to resolve the turmoil could be lauded in years to come, observers say.
The Nobel Economics Prize will be announced on October 10 amid a snowballing European debt crisis and a parallel crisis across the Atlantic in the United States that each have politicians and economists butting heads on the best course of action to end the pain.
But while the spiralling debt problems “could definitely push economic thinking in a new direction,” economics doctoral student Jonas Kolsrud at Uppsala University, north of Stockholm, said they were unlikely to inspire the 2011 Nobel Prize committee’s pick.
“There seems to be a minimum of 30 years from the time of a discovery until it is recognised with a prize,” he said.
The five-member committee that awards the Nobel memorial prize for economics, which was added to the mix of prestigious awards in 1969, insists its choice is never based on such recent events.
“The prize is very non-political, non-trendy and just focused on research contributions,” said the committee’s new chairman Per Krusell, stressing that “we do a very thorough evaluation that can last years, so it tends to be a long lag from the time the research is done until it is awarded.”
That was the same line Mr Krusell’s predecessor, Bertil Holmlund, took when asked whether the onset of the global financial crisis would affect the committee’s pick in 2008, insisting there would “definitely not be any effect in the short term.”
Yet his committee proceeded to hand the award that year to Princeton professor and New York Times columnist Paul Krugman, known for predicting the crisis and for his criticism of unfettered free market policies accused by many of contributing to the market mess.
Mr Krusell said that he understood that the prize “could be interpreted by the public as a statement of some kind,” but insisted Prof. Krugman’s political commentary had nothing to do with him winning the award.
“It’s a coincidence,” he said, pointing out that the 58-year-old US economist had been lauded for his trade theory dating back to the 1970s.
Olof Somell, who is subject manager for the Economics Prize at the Nobel Museum in Stockholm said the public understanding was: “here was the man who foresaw the crisis and now he receives the prize.” However, he agreed that “if you look at the actual prize citation, he received it for his work on international trade. I would say it was a coincidence.”
While the prize committee does want to keep up with the times, he explained “they want to be current within academia, not within politics.”
He stressed, however, the difficulty of guessing the committee’s reasoning, pointing out that all Nobel prize archives are sealed for 50 years.
“And economics as a category was only first awarded 1969. We look at the citations, but in terms of looking at who nominated whom on what background, what the internal discussions were, we’re in the dark.”
If the committee this year were nonetheless to award work on debt issues, Laurent Simula, an associate professor of economics at Uppsala University, said possible picks would be US economists Kenneth Rogoff and Carmen Reinhart, whose recent book This Time Is Different compares eight centuries of financial and debt crises.
“It’s quite impressive,” he said.
However, he too said he suspected debt issues would not get the nod this year, instead putting his money on the field of political economy, where several committee members have their background.
“Harvard professor Alberto Alesina is often cited in that field,” he pointed out.
Mr Kolsrud meanwhile guessed the prize could go to research on economic growth, where Robert Barro and Paul Romer topped his list, or work on consumption theory, where he listed Robert Hall, Lars Peter Hansen and Christopher Sims as the most likely picks.