Tuesday, June 12, 2012

Times Are Hard For Nobel-Winners Too

Here's the news all of you Nobel hopefuls were dreading. The Nobel endowment has taken a hit, and will be reducing the cash prizes from $1.4 million to $1.1 million. You might think, as the Nobel prize in economics is actually a a faux-Nobel, funded by the Swedish central bank, that economists would be immune. Our Nobel-winners (just like those of us who are on central bank payrolls) basically live off seignorage. Tough luck, though. The NYT article informs us that:
The Nobel Memorial Prize in Economic Science — technically not one of the original prizes — is also being scaled back.
Should we worry about the incentive effects? Dale Mortensen says there's no problem:
At the time you’re doing your work you’re not exactly striving for the Nobel Prize, but to make a contribution, make your name, maybe make tenure. The Nobel is a great honor that comes much later in life. The money itself is a windfall. It probably wouldn’t matter what the amount is, although it’s nice to have.
Actually, Peter Diamond tells us that the cash prize is the tip of the iceberg:
One of the things that comes with the prize, besides the prestige and the money, is the opportunities to make more money.
Maybe Diamond should tell Mortensen about this.


  1. Interesting. Shortfall of donors to the foundation or something?

    And while we're talking about nobel prize winners; RIP Elinor Ostrom.

  2. The Nobel Prize in Economics may not be an original Nobel (as set up by Alfred Nobel himself - but it was set up in memory of Alfred), but it does follow all the basic rules of the original Nobel Prizes. There is an old paper by Assar Lindbeck in Journal of Economic Literature (March 1985) describing the set up of the Nobel Prize in Econ, for anybody interested.

  3. "Shortfall of donors..."

    No, it looks like a decrease in the market value of the portfolio.

  4. Is it true that Bob Lucas had to give half of his Nobel winnings to his ex-wife? What a shame if that is true.

    1. You would have to check with him. I'm sure his ex-wife did not think it a shame.

    2. I've always found that story hilarious (got a feeling he does not). It speaks a great deal to your intelligence when your ex-wife has the foresight to slip a "if you win the nobel prize in the next decade I get half" clause in your divorce.

    3. Via the LA TIMES, some details of the divorce clause:


  5. Or maybe Dale should ask Tom Sargent for some tips: