The Political Economist

A well-deserved Nobel prize for a man that helped establish a new field of behavioral economics , disrupted the academic milieu in the rigid field of finance, and successfully started implementing his ideas as actual policies in a number of countries (most famously through the Nudge Unit in the UK - officially Behavioural Insights Team  - set up under Cameron's administration, and the White House Social and Behavioral Science Team , set up under Obama's administration). It wouldn't be exaggerating to say that Thaler's scientific contributions were among the most applicable of all Nobel prize winning contributions in economics thus far (even more than Roth's kidney markets, Fama's EHM and Shiller's Irrational Exhuberance, or Deaton's  measurements of poverty and inequality, to name just a few most recent notable laureates).  It's been 15 years since behavioral economics has been recognized for the first time by the Nobel Committee, awardi...

It's that time of the year again - Nobel prize awards ! After being awarded to a single recipient two years in a row ( Deaton in 2015 , Tirole in 2014 ), this year the Nobel in economics is shared by two worthy winners, both relatively unknown outside the economic arena. The reason is that both Oliver Hart from Harvard, and Bengt Holmstrom from MIT, are theorists. What is their area of expertise? Contract theory , arguably the most complex field in modern economics. Which is why this year's prize is another laudable effort to commemorate this very important branch of economic theory for the very first time.  So what's contract theory all about? Or to be more precise, what was the significance in their contribution? The official statement says the following: "Modern economies are held together by innumerable contracts. The new theoretical tools created by Hart and Holmström are valuable to the understanding of real-life contracts and institutions, as well as p...

Douglass C. North , one of the greatest economists of our time, a Nobel prize winner responsible for reinventing institutional economics, died this week at the age of 95. His passing follows those of other notable institutional and political economists in the past few years, such as Elinor Ostrom , James Buchanan , Ronald Coase , and his Nobel co-recipient Robert Fogel, all champions of the new approach to examining economic interactions, and all, just like North, with groundbreaking contributions to the field. Together with Olivier Williamson and Ronald Coase, he was attributed as the pivotal co-founder of the  New Institutional Economics school of thought , a school of thought I personally favor and advocate.  Out of all academics North arguably led the most exciting life. He was a navigator for the US Merchant Marines during WWII, a passionate photographer, a deep-sea fisherman, an heir to an insurance fortune, a pilot (he had his own plane), a ranch owner, fancied...

Over the past two weeks, in the same schedule as always, we had the opportunity to enjoy the announcements of Nobel prize winners. Last but not least was the Nobel prize in economics (or to be more precise for all those doubters out there, the Sveriges Riksbank Prize in Economic Sciences in Memory of Albert Nobel). And once again the prize went into well-deserved hands. Angus Deaton from Princeton University , a brilliant academic with a distinguished career and list of contributions (recently a member of the National Academy of Sciences ), a global fighter against poverty and inequality, and above all an economist with an eye for applicability of his research. What is surprising is that once again, the same as last year , the prize was awarded to a single recipient (a rare occurrence in the past 15 years in this field). However what hardly came as a surprise was the field of research that was finally acknowledged with a Nobel prize - inequality and development, for the first time si...

From LSE's You Tube channel : If the video doesn't work (some browsers could do that), see it here . LSE's Nobel professor Christopher Pissarides is being 'grilled' by Conor Gearty in his Gearty Grillings . The short video surprisingly includes a lot of good ideas on the size of state, labor markets, and the Eurozone troubles. Even though he declares him self an open social democrat, it's obvious he believes in the power institutions and doesn't succumb to any of the typical socialist fallacies. Nor is he being unrealistic about the solutions awaiting Europe.  Just to remind the readers, Pissarides won the Nobel prize for his search frictions theory in the labor markets. Here's the Nobel prize lecture , and you can find some of his best papers here , and the newest ones here .

It's that time of the year again - the Nobel prize announcements. As always, the last in line is the Sveriges Riksbank Prize in Economic Sciences in Memory of Albert Nobel, or colloquially the Nobel prize in economics, awarded yesterday. This year the honorary recipient was Professor  Jean Tirole from Toulouse, France, one of the most cited economists in the World. He is only the third Frenchmen to receive the prize, first one since Maurice Allais in 1988. In addition, this ended an almost 15 year domination of US-based economists (at least one recipient each year was a US-based economist - they still dominate the field, as in every other science btw ). Also he's one of the rare economists who got the honor as a single recipient (which became particularly rare in the past 15-20 years). The award was given for his contributions in the "analysis of market power and regulation". Basically Tirole studied monopolies and oligopolies (since most industries are act...

This title is actually taken from Paul Krugman . For once I agree with him. Krugman's blog came as a response to a great text by this year's  John Bates Clark medal recipient  Raj Chetty from Harvard. Chetty wrote a column for the New York Times this weekend where he defended the field of economics on the basis of its scientific rigor. His text came as a reaction to many non-economists questioning the recent Nobel prize being awarded to two opposing theorists explaining the same phenomenon ( Fama and Shiller ), but also (I believe) to a series of texts about economics and philosophy started in the NYT back in August, initiated by two philosophers Alex Rosenberg and Tyler Curtain writing a text called  "What is Economics Good For?" . Their main resentment towards economics is the imprecision in its predictive abilities. Or in other words, economics, with all its new modern analytical tools, not only couldn't predict the crisis, but is also failing to solve it...

The 2013 Sveriges Riksbanks Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to three recipients for their empirical analysis of asset prices:  Eugene Fama , University of Chicago; Lars Peter Hansen , University of Chicago; and Robert Shiller , Yale University.    "There is no way to predict whether the price of stocks and bonds will go up or down over the next few days or weeks. But it is quite possible to foresee the broad course of the prices of these assets over longer time periods, such as, the next three to five years. These findings, which may seem both surprising and contradictory, were made and analyzed by this year’s Laureates, Eugene Fama, Lars Peter Hansen and Robert Shiller." You can find a more detailed explanation in the official press release , in addition to an excellent technical note  explaining asset price movements, provided by the Nobel committee.  Also, around the blogosphere many notab...