In recent years, the young generation has shown an incredible interest in the field of economics. What was once considered a boring subject, economics is now more accessible and easier to understand than ever before. Whether it is YouTube or the Khan Academy, many leading experts have sparked curiosity for economics among the hip cool kids. As a result, the winner of the Nobel Prize in Economics is under the spotlight. So, what is the Nobel prize all about, and who was victorious in 2020?
Nobel Prize in Economics: A Primer
In 1968, Sweden’s central bank (Sveriges Riksbank) created the Prize in Economic Sciences to honor Alfred Nobel, the founder of the Nobel Prize. The prize is awarded by The Royal Swedish Academy of Sciences, utilizing the same principles as for the other Nobel Prizes. The inaugural Nobel Prize in Economics was awarded to Ragnar Frisch and Jan Tinbergen in 1969 for “having developed and applied dynamic models for the analysis of economic processes.” Today, recipients receive more than $1 million in prize money.
Who Won in 2020?
Paul R. Milgrom and Robert B. Wilson, two professors at Stanford University, were selected for the prize in 2020. According to the Nobel Committee, Milgrom and Wilson were chosen for helping make auctions run more efficiently, in a way that benefits sellers, buyers, and taxpayers worldwide.
The two Americans are pioneers of auction theory, a branch of economics that examines how people act in auction markets by researching their properties and concluding that the item’s price will eventually reach fair market value.
They tried to discover how to make auctions function more efficiently. They highlighted why bidders tend to place bids below their own best estimate of the item’s value. This suggested that the product goes for less than what it is worth and not to the buyer who wants it the most. The economists’ work will offer guidance on how to price and allocate scarce goods. This concept can also apply to public policy, allowing the government to auction carbon credits to polluting companies, for example.
Notable Past Winners
In total, 52 Nobel Memorial Prizes in Economic Sciences have been given to 86 individuals. Here are some of the more noteworthy recipients:
- Paul Samuelson (1970):He created a static and dynamic economic theory and improved economic science analysis.
- Friedrich Hayek (1974):With Gunnar Myrdal, Hayek pioneered the theory of money studies and analysis.
- Milton Friedman (1976):He was celebrated for his accomplishments in monetary history and theory to do with strategies aimed at stabilizing the economy, as well as looking at patterns of economic consumption.
- James Buchanan (1986):Buchanan was awarded a Nobel for developing the contractual and constitutional foundations for economic and political decision-making.
- Joseph Stiglitz (2001):Alongside George Akerlof and Michael Spence, Stiglitz became a Nobel recipient for analyzing markets where one party has more information than another.
- Paul Krugman (2008):He won for analyzing the geography of economic activity.
What is Economics?
Is economics more than just being an armchair quarterback on Monday morning? While the public mistakenly thinks economists possess a crystal ball to predict the future, economics is a science that adheres to a set of fundamental laws and principles. Like other science fields, economics has various branches that require different insights and calculations. The Nobel Committee has become a controversial group in recent years, but the list of winners in economic science of the last several decades is intellectually diverse and specializes in numerous areas.