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The Nobel Puzzle
Ladbrokes gives Eugene Fama the best odds for winning the economics Nobel. Thus, if Fama wins he will have deserved to have won and if Fama loses he will not have deserved to have won. The Nobel committee cannot go wrong no matter what it does! Think about it.
Posted by Alex Tabarrok on October 8, 2009 at 12:50 PM | Permalink
Comments
Hmm. If Fama wins, wouldn't he likely share the prize with French. With Fama at 2-to-1 and French at 6-to-1, is there a nice, hedged trade here?
Posted by: Highgamma at Oct 8, 2009 12:58:55 PM
good point, highgamma. in that case the hyphen in Fama-French is really a minus sign.
Posted by: babar at Oct 8, 2009 1:11:15 PM
French starting working with Fama long after Fama had done his best work.
Posted by: Commenterlein at Oct 8, 2009 1:16:46 PM
Oh, and I'd say Oliver Hart at 40:1 is a buy.
Posted by: Commenterlein at Oct 8, 2009 1:17:59 PM
Fama is best known for the efficient market hypothesis, which has come under a bit of disrepute recently. That would make him an odd choice.
His work with French was a nice step forward from CAPM (or fine tuning, as some suggest).
Therefore, I'd regard F-F as more likely than just Fama.
Posted by: fusion at Oct 8, 2009 1:18:23 PM
There should be a market betting on how Paul Krugman reacts if Fama wins...
Posted by: JackTrade at Oct 8, 2009 1:40:50 PM
Here's my stab at Alex's point:
Fama has the best odds, so if he wins, you can make a case that the markets were right (Efficient Markets Hypothesis worked). But also, the field is the favorite relative to Fama, so if Fama loses, you could also make a case that the EMH applied.
Posted by: Dave at Oct 8, 2009 1:47:20 PM
Do you think the Nobel committee would award Fama based on the efficient market hypothesis given last year's dislocation? Would be quite interesting to watch the commentary. Sort of like awarding Karl Marx the award posthumously after the fall of the Berlin wall.
Posted by: Bill at Oct 8, 2009 1:51:38 PM
Dave, I believe it's more: if Fama wins for saying markets are right, then the betting markets were right, so his theory worked. If he loses, the betting markets were wrong, so deserved to lose, because his theory did not work.
Posted by: fusion at Oct 8, 2009 1:51:57 PM
Since I can't get into that website at work (blocked for gambling...sigh), what sort of odds does Barro have?
Of course, he has the same timing issues as Fama.
Posted by: JackTrade at Oct 8, 2009 1:55:34 PM
Not true. Odds for Fama were the highest in past years, so he has been already disproved.
Posted by: jose at Oct 8, 2009 1:57:07 PM
Fama (or Fama-French) has got to win sooner or later, but I cannot see them awarding him the prize right now, given the financial crisis and general distrust in efficient markets.
It would be a good year to award Barro for macroeconomic growth contributions.
Posted by: Jack at Oct 8, 2009 2:08:02 PM
No, my money is on Weitzman-Nordhaus for several environmental economics contributions including the imperfect but important "green GDP" and "green accounting" work. It would also be a feel-good prize in a year when economics is not a particularly liked field.
Posted by: Jack at Oct 8, 2009 2:11:06 PM
Whatever the nobel committee's demerits are, sarcasm isn't one of it. Which is a pity.
Posted by: JSIS at Oct 8, 2009 3:03:29 PM
It's surprising that Fama hasn't already won it. Just look at the discussion above. People seem to suggest that he could win it for 2 accomplishments - ECMH and Fama-French.
Who else can boast two separate Nobel worthy accomplishments? Historically, probably just a handful of winners.
@Fusion - you're probably right... and nicely done to alex as well.
Posted by: Greg A. at Oct 8, 2009 3:05:52 PM
I'm going long Lars Hansen.
Posted by: Jim at Oct 8, 2009 3:11:39 PM
For those who want a bit more of the list, Mankiw has posted the leaders (50/1 or better).
Posted by: D. Watson at Oct 8, 2009 3:30:06 PM
Wicked burn.
I also like high-gamma's comment, partially because it hits on the overstated connection between EMH and prediction markets (or the realm of feasible trading schemes and prediction markets).
Posted by: Adam Hyland at Oct 8, 2009 3:42:19 PM
Ah, yes. Fusion got it.
Posted by: Dave at Oct 8, 2009 4:03:47 PM
I like the Austrian economist Ernst Fehr's work (absolutely not related to so-called 'Austrian Economics'), I believe he will be rewarded with the Nobel Prize at one moment or another. But, like Jack and being given the international political climate, I'm putting my money on Nordhaus and Weitzam.
Posted by: CuriousEconomist at Oct 8, 2009 4:07:02 PM
I meant Weitzman, of course. ;)
Posted by: CuriousEconomist at Oct 8, 2009 4:08:38 PM
Literature prize is already awarded: Hertha Muller
Posted by: k at Oct 8, 2009 4:30:30 PM
My money's on Shiller. (1) He's the anti-Fama (at least as far as ECMH). (2) His name has been all over the news in the last year, as people talk up the Case-Shiller index. I'm not saying Krugman won because he was in the Times twice a week, but it can't hurt to get your name out there.
Posted by: Alex at Oct 8, 2009 4:43:58 PM
Ladbrokes clearly hasn't thought much about things in setting their odds. They have to steer clear of Macro and Finance this year. Giving the prize for "the efficient market hypothesis" would totally discredit the prize in the eyes of much of the public, even if Fama deserves it.
I think either theory of the firm, econometrics, or environmental this year.
Posted by: A at Oct 8, 2009 4:48:52 PM
Gotta short Romer at 4-1. Seriously.
Posted by: BZ. at Oct 8, 2009 5:31:00 PM
