William Nordhaus and Paul Romer Win Nobel Prize for Economics

Kenny Grant
October 9, 2018

A number of people are trying to find innovative options that can help reduce emissions and make environmental protection easier for everyone.

The Prize in Economic Sciences 2018 has been awarded to William D. Nordhaus "for integrating climate change into long-run macroeconomic analysis" and Paul M. Romer "for integrating technological innovations into long-run macroeconomic analysis".

Nordhaus, 77, was specifically honoured for "integrating climate change into long-run macroeconomic analysis".

Nordhaus also showed how economic activity interacts with chemistry and physics to "produce climate change", the Academy said.

Nordhaus has argued that climate change should be considered a "global public good", like public health and worldwide trade, and regulated accordingly, but not through a command-and-control approach. "I hope the prize today could help everyone see that humans are capable of wonderful accomplishments when we set about trying to do something". "The theory has generated vast amounts of new research into the regulations and policies that encourage new ideas and long-term prosperity".

Just a day after a United Nations panel called for urgent action on climate change, the Nobel Prize in economics was awarded Monday to one American researcher for his work on the economics of a warming planet and to another whose study of innovation raises hopes that people can do something about it.

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Romer's career has also taken him outside the academic world.

"They have taken macroeconomics to a global scale, to tackle some of the world's biggest problems", said the Nobel Prize committee.

Romer's work focuses on the way in which societal innovations based around technology can boost long-term growth. Versions of a carbon tax have been used in Europe but have yet to be adopted in the United States.

"Paul's first job was at Rochester, where he did pathbreaking work to figure out how firms' decisions to invest in research and development lead to economic growth". The theory is both conceptual and practical, as it explains how ideas are different to other goods and require specific conditions to thrive in a market. Last year's prize went to American Richard Thaler for studying how human irrationality affects economic theory.

The Nobel Economics Prize was not part of the original line-up of awards as envisaged by Alfred Nobel and is therefore officially known as the Nobel Memorial Prize in Economic Sciences.

The peace prize, which was announced in Oslo on October 5, was awarded to Denis Mukwege, a gynecologist from the Democratic Republic of Congo, and Nadia Murad, an activist and victim of war crimes.

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