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Should Ben Bernanke win a Nobel Prize?
Prior to his leading the Fed, I viewed Bernanke as having been in the running for a future Nobel, although not being a necessary or hands-down winner.
Now, let's say that all of his unusual maneuvers at the Fed don't work. I believe his chance for the Prize will be slim. Correctly or not, he'll be remembered as the guy with the failed ideas.
Alternatively, say his methods do work and the economy recovers relatively quickly, with a minimum of additional pain for the banking sector. Should his chance go up? Will his chance for the Prize go up? Should he then be a shoo-in for the Prize? Could his success count as a remarkable and indeed unprecedented test of an economist's theories?
Just wondering.
Posted by Tyler Cowen on April 19, 2009 at 04:31 AM in Economics | Permalink
Comments
Krugman's award should make the answer to this question perfectly obvious. It is not just about the quality of the academic work.
Posted by: ben at Apr 19, 2009 4:33:27 AM
Re the first comment: the quality of Krugman's work was extremely high. There are a couple people I'd place in front of him as more deserving (including a couple in trade that I fear are now permanently out of the running), but one has to have a severely strong political biases to not acknowledge that Krugman has done some truly fantastic work over the past few decades. Long before he was a public figure I can remember being a bright-eyed young econ student and becoming absolutely enraptured by his international trade papers and I doubt I was alone in that feeling (in fact, I've met enough young trade economists to know that I am far from alone).
As for Bernanke, he is one of the few economists who has a chance to venture into the realm usually reserved for the hard scientists - experimentation (at least on a macro level). Unfortunately, we have no control group (and no doubt some wish we did, and that they could live there instead).
I agree with Tyler that this chance to put theory into practice gives Bernanke a unique chance to either propel himself towards the top of the list, or drop off altogether. I see no way for anyone to win based on theoretical work that failed miserably in practice, but I do think one would have an edge if fairly novel theories were put into practice with great success.
In short, as other economists drift to or from the prize like piles of jelly, his chances will now run like water. Which way they flow has yet to be determined.
(was my "liquidity" metaphor too forced?)
Posted by: Nylund at Apr 19, 2009 5:55:43 AM
Nobel? Do you mean for Peace, Literature, Physics, Chemistry or Medicine/Physiology?
Or are you referring to the made up Prize?
Posted by: dearieme at Apr 19, 2009 6:11:48 AM
Assuming the Bank of Sweden (the Sveriges Riksbank) and the other world financial institutions survives, I would hope their prize committee would rethink their award policy. Unlike the Nobel prizes, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel seems to be guided more by politics and who's who.
Posted by: Jim at Apr 19, 2009 6:17:48 AM
i) Swift recovery in the relatively short run is not all that farfetched. Politicians in both the US and Europe are spending money like drunken sailors on leave and nationalizing banks all over the place in order to dictate the credit supply; it would be surpricing if this wouldn't have a significant effect in the short run. And when the economy eventually goes down the drain again because the spending is still unsustainable, very few would even consider the possibility that it might have something to do with what Bernanke and the politicians did today. Which leads to...
ii) a) How the economy performs and b) P(Bernanke will receive a Nobel Prize in economics) have little to nothing to do with each other.
Posted by: US at Apr 19, 2009 6:28:33 AM
I'm surprised that there is a cohort that is constantly morally offended by the idea of an economics Nobel on grounds of integrity of the prize, yet seems to have no problem with the awarding of the Peace Prize over the last fifty years.
Posted by: Millian at Apr 19, 2009 7:04:56 AM
You gotta love dearieme.
Posted by: James at Apr 19, 2009 7:15:17 AM
The Swedish Central Bank Prize - at least when it is awarded to Macroeconomists - has this in common with the Peace and Literature Nobels: it might as well be for Astrology. But at least the latter two are genuine, though risible, Nobels.
It would be fitting, I think, for the Swedish prize to be scrapped as an expression of apology and remorse for the role of the profession in bringing about the present calamity. Since an economist will naturally
enquire "What's in it for me?", I'll suggest that it might improve the odds of escaping the hangings that might yet be visited on the banksters and politicians.
Posted by: dearieme at Apr 19, 2009 7:40:38 AM
The Nobel Prize in economics should be done away with.
Posted by: AADL at Apr 19, 2009 8:25:11 AM
yes, he should win.
Posted by: buland at Apr 19, 2009 8:30:45 AM
Had Alfred Nobel wanted to establish an economics prize he certainly would have. But he didn't. It's a prize tacked onto the genuine Nobels by and from the Sveriges Riksbank.
Should Bernanke win a prize? Sure.
How about the Hasty Pudding Prize with a special citation for his verve and vigor? [He might have to share that one with Paulson.]
Or how about the Turbo Tax Award for a speedy economic return. [Definitely won't have to share that one, at least not with Geitner.]
Posted by: Jim at Apr 19, 2009 8:58:57 AM
"Had Alfred Nobel wanted to establish an economics prize he certainly would have."
Well, back then economics wasn't a science.
Posted by: Daniel Reeves at Apr 19, 2009 10:11:18 AM
You guys are amazing. I think only "economist" types, drowned in academia, with Keynesian delusions could come up with these comments. Bernanke is an idiot. Nothing less. Just like those 2 "economists" awarded the Nobel prize back in the 1980's for their work in financial innovation, leading the 1998 Asian contagion, derivatives, mathematical voodoo as such, there are no MONETARY SUPPLY solutions to a lack of productive energies, and earnest enterprise. America and the world are in trouble because the FED RESERVE exists and Alan Greenspan got to throttle up the money supply. This led to FALSE demand, that led to massive DEBT creation. The debts need to be cleared. Making lots more debt will not solve anything. Roosevelt tried it, too. It made a LONG LONG Depression. The answer of all Keynesian morons is that they didn't SPEND ENOUGH FAST ENOUGH. That is Krugman's position. He is also an idiot. He and Bernanke spent way too much time inside locked rooms debating how the world outside works. They are both wrong, and both should be kicked out of their positions as professors and FED regulators. AS for Geithner, well he is just a crook. Nothing more. He should be fired and then put in prison where he belongs. You guys have a nice day.
Posted by: diogenes (Tampa,Fl) at Apr 19, 2009 10:22:33 AM
Poor Smith, Marx, Ricardo, von Thünen, Malthus, Mill, Walras, Menger, Bastiat, Veblen, etc. tossed into the black hole of economic history.
Don't remember literature or peace being in the sciences either. But who knows. I'm probably wrong there also.
I understand that Bernanke is one of the foremost experts on the Great Depression. I suppose he's got great theories about interesting stuff related to money. But the question remains does he deserve an award or prize? Sure, why not.
Everyone gets a prize. Everyone except the taxpayer...Oh, that's right we get a prize also, bigger government, more debt & taxes. Sounds fair.
Posted by: Jim at Apr 19, 2009 11:05:50 AM
Shiller should win.
Posted by: Alex Tabarrok at Apr 19, 2009 11:41:21 AM
Imagine the moral hazard a Bernanke Nobel prize would create at this point. Young economists would learn that the best way to get the highest honor of their profession, would be to take the reins of a large world economy, destroy it, and then "save" it.
Posted by: Joshua Allen at Apr 19, 2009 11:44:48 AM
Daniel Reeves: Well, back then economics wasn't a science.
So nothing has changed?
Posted by: capitalistimperialistpig at Apr 19, 2009 11:48:42 AM
It's a prize in "economic sciences" not economic policy; that suggests that whether he's a good Fed chair shouldn't matter. I don't think any of the previous awards cited policy-making.
Bernanke's academic credentials are (unlike Greenspan's) very legit, and this crisis is making some of his scholarly research on the depression and the "financial accelerator" seem more relevant. So his chances of winning based on his 'scientific' contributions may be improving.
Posted by: Bill C at Apr 19, 2009 12:15:00 PM
Stiglitz was probably helped by his public positions. Being Chair of the CEA during the very prosperous 1990s, for example, probably influenced the way the was perceived by the Nobel committee.
I'm sure public sector success will be a crucial part of Bernanke's potential Nobel prize too.
Posted by: Scott Wentland at Apr 19, 2009 1:24:01 PM
If Ben has seen further, it is by standing on the shoulders of giants. Surely Gideon Gono should be recognized for his pioneering work in "unusual maneuvers" on an epic scale.
Posted by: anonymous at Apr 19, 2009 1:26:18 PM
I am very critical of Bernanke, but let's put that aside. Tyler, I wonder if in a future post you could lay out the criteria for success/failure. For example, suppose back in December 2007, when they were going to do the TALF (or whatever, I'm getting them mixed up at this point), Bernanke had explained what he would do with the monetary base over the next twelve months, and further explained what the unemployment rate, deficit forecast, and S&P500 would be in April 2009.
Do you think people would have said, "Woo hoo, let's do it and hope things turn out that well!" ?
My point is, when do we get to say Bernanke has failed?
In all honesty, I've got a very low bar right now. If the U.S. manages to avoid double-digit inflation in each of the next five years, I will admit I underrated Bernanke. (I am being serious, so anyone with a super memory, please hold me to this.)
Posted by: Bob Murphy at Apr 19, 2009 1:35:21 PM
What Bill C said.
Posted by: Barkley Rosser at Apr 19, 2009 2:33:34 PM
Even if the economy recovers quickly there will be a lot of debate over how much credit Bernanke should get, and that debate itself will be very political. If a consensus emerges that he deserves a lot of credit then I think he will probably win, but maybe not still be a shoo-in.
If applying macro theories to improve solve a crisis and promote growth were worth that much Jeffrey Sachs would probably be in the running for work in Bolivia and Poland (clearly the hyperinflation ended and Poland is doing well). But he's associated more with Russia's failure and no longer perceived as enough of an academic economist to be taken seriously, I think.
Posted by: Steve at Apr 19, 2009 3:39:49 PM
Well, on the bright side, he can publish to The Journal of Negative Results.
Posted by: Andrew at Apr 19, 2009 4:25:35 PM
Bernanke's citation rankings aren't great according to Tom Coupe's website (107 overall, Krugman was 14 for example). I think he's still in the running for the prize, but much more so because of the world downturn. Not so much because of his public role, but because depression models seem more relevant now. The downturn will be changing research topics and it's quite possible some of Bernanke's papers will be big beneficiaries of that. But as is, his current work and influence doesn't merit a prize.
Posted by: Charlie at Apr 19, 2009 6:54:04 PM
