William Nordhaus, Paul Romer awarded Nobel Economics Prize

William Nordhaus, Paul Romer awarded Nobel Economics Prize

William Nordhaus, Paul Romer awarded Nobel Economics Prize

Paul Romer was awarded the the 2018 Nobel Memorial Prize in Economics Sciences.

Americans William Nordhaus and Paul Romer, pioneers in adapting the western economic growth model to focus on environmental issues and sharing the benefits of technology, won the 2018 Nobel Economics Prize on Monday.

Nordhaus's research shows that the most efficient remedy for problems caused by greenhouse gas emissions is a global scheme of carbon taxes uniformly imposed on all countries.

Mr. Nordhaus is acknowledged for "integrating climate change into long-run macroeconomic analysis", while Mr. Romer is credited with "integrating technological innovations into long-run macroeconomic analysis". Both of them are from the United States. In the mid-1990s, he became the first person to create an integrated assessment model, i.e. a quantitative model that describes the global interplay between the economy and the climate.

Romer, 62, who has studied why some economies grow faster than others, has produced research that shows how governments can advance innovation. At a news conference Monday, Romer said his research has left him optimistic that society can solve even a threat as deeply challenging as the warming of the planet. "Humans are capable of unbelievable accomplishments if we set our minds to it".

He said "Nordhaus has been concerned all along with repairing the damage" to the environment. "It was for work on one of the most important problems the globe faces, which is climate change", he said.

"His tools allow us to simulate how the economy and climate would co-evolve in the future under alternative assumptions about the workings of nature and the market economy, including relevant policies".

Unlike Romer and Nordhaus, the panel of scientists who produced the United Nations report expressed little hope that the world will rise to the challenge.

The Nobel economics prize wraps up the 2018 awards season, notable this year for the lack of a literature prize, postponed by a year for the first time in 70 years over a rape scandal that came to light as part of the #MeToo movement. While capital and labour are "rival goods", in the sense that their use in the generation of value at one place precludes their use for generation of value elsewhere, while ideas are "non-rival goods", the same idea can produce value at multiple locations, unless restrictions are put on their access. Last year's prize went to an American, Richard Thaler of the University of Chicago, for work on how human irrationality affects economic theory.

Previous year it was awarded to the behavioural economist Richard Thaler, who won for his work on nudge theory, the idea that small "nudges" can influence our economic and social behaviour, and his work around humans being irrational economic actors.

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