Arnold Kling  

Phelps and the Nobel

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I once joked that Edmund Phelps would have won the Nobel Prize if he were Scandinavian (I probably made that joke when Finn Kydland was annointed). Today, Phelps won it, anyway.

Phelps was mentioned in econlog blog posts for his views on similarities between the post-crash economies of the 1930's and the last several years, the institutional requirements for a dynamic economy, and the dollar and demographics.

My theory on Nobel Prizes is that they are awarded for what baseball analyst Bill James calls "peak value" rather than "career value." Sandy Koufax had great peak value, winning 27, 26, and 25 games in his three best seasons, but his career wins were only 165. Don Sutton, Koufax's teammate in 1966, had great career value, with 324 wins, but he won only 21, 19, and 19 games in his three best seasons.

In economics, high "peak value" is represented by one or two highly-cited papers. Myron Scholes, John Nash, Michael Spence, and Ronald Coase exemplify that. On the other hand, folks like Samuelson, Modigliani, and Friedman represend both high peak value and high career value, in that their most-cited works are impressive but are far from their sole claim to fame.

I can think of a lot of economists with high career value but only modest peak value, and they seem unlikely to win Nobels--someone like Robert Hall does not even generate speculation. Very few Nobel Laureates fit the pattern of high career value and modest peak value--the only one who comes to mind is Douglass North. Perhaps George Stigler and Amartya Sen.

Phelps' peak value comes primarily from the "Phelps volume," which propelled the natural rate hypothesis to the forefront of the profession. I remember Bernie Saffran's enthusiasm in recommending that book, back in my undergraduate days at Swarthmore.

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CATEGORIES: Macroeconomics

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The author at Club for Growth in a related article titled Tuesday's Daily News writes:
    ECONOMIC NEWS Dynamic Capitalism - Edmund Phelps, Wall Street Journal Phelps and the Nobel - Arnold Kling, EconLog Financial Tsunamis Will Sink All Ships of State - DC Examiner Editorial Inverted Yield Curve Mixed Signals - Michael Darda, National Revi... [Tracked on October 10, 2006 9:23 AM]
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Bruce G Charlton writes:

I am shocked that an economist, and one who has read Bill James, should use 'wins' as the primary measure of a pitcher's excellence...

AJ writes:

The only thing Phelps is remembered for is a an hypothesis which is now thoroughly discredited. However, it was eagerly embraced by Keynsian liberals for 20 years, made it into most textbooks, and like most liberal ideologies, fails to die once disgraced.

And for that you win a Nobel prize!

BobK writes:

"My theory on Nobel Prizes is that they are awarded for what baseball analyst Bill James calls 'peak value' rather than 'career value.'"

No need to theorize, Arnold. Read Nobel's will. The science prizes are awarded for *discoveries* or *improvements* in technique:

"The said interest [on the capital endowment] shall be divided into five equal parts, which shall be apportioned as follows: one part to the person who shall have made the most important discovery or invention within the field of physics; one part to the person who shall have made the most important chemical discovery or improvement; one part to the person who shall have made the most important discovery within the domain of physiology or medicine; one part to the person who shall have produced in the field of literature the most outstanding work of an idealistic tendency; and one part to the person who shall have done the most or the best work for fraternity among nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses."

In other words, for the science prizes at least, not for lifetime achievement.

Of course, Nobel's will did not provide for (or fund) the "Nobel Memorial" prize in economics. But is it a surprise that the Royal Swedish Academy of Sciences would apply the same kind of criterion?

bogdan writes:

Fama is probably a very good example of this.

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