Who wins the Nobel Prize? - How Fair Is the Nobel? - influence of government policy on choice of winners for the Nobel Price in economics

Challenge, March-April, 1999 by Johan van Gompel

The style of thinking and the instruments of these modern microeconomics were used for an increasing number of applications, including political and collective decision-making. This led to the "public choice theory" to which Buchanan (1986) made a major contribution. This theory discusses the factors that influence and often disrupt the translation of electors' preferences into political decision-making, such as personal power, prestige of politicians, or the specific interests of all kinds of pressure groups. Sen (1998) has made extensive contributions to the "social choice theory," which analyzes the relationship between individual preferences and collective decisions. By combining tools from microeconomics and philosophy; he has restored an ethical dimension to economics.

Theory in Practice

Many Nobel Prize winners took up political duties and in this way were able to exert an influence directly or indirectly on economic policy (see Table 4). Tinbergen, Samuelson, Tobin, Friedman, Lewis, and Modigliani were advisers to governments or public bodies of various countries (mainly the United States and third world countries) and international organizations (such as the European Community for Steel and Coal [ECSC], the World Bank, and the United Nations). Myrdal was a senator under the Swedish Social-Democrats and Bertil Ohlin was party chair of the Swedish Liberal Party. North was an adviser to the privatization operations of the Czech government.

Table 4

Main Political Commitments of the Nobel Prize Winners

Jan Tinbergen           Adviser to governments (United Arab
                        Republic, Turkey, Venezuela, Suriname,
                        Indonesia, Pakistan) and to international
                        organizations (ECSC, World Bank, United
                        Nations)

Paul Samuelson          Adviser to various American public bodies
                        under President Kennedy (including the
                        Treasury Department, the Council of
                        Economic Advisers, and the Federal Reserve
                        Board)

Gunnar Myrdal           Senator, Swedish Social-Democrats

Milton Friedman         Adviser to various American public bodies
                        under President Nixon (including the
                        Treasury Department)

Bertil Ohlin            Party chair of the Swedish Liberal Party

Herbert Simon           Adviser to various American public bodies
                        under Presidents Johnson and Nixon
                        (including President Science Advisory
                        Committee)

Arthur Lewis            Adviser to the United Nations and various
                        governments of developing countries

James Tobin             Adviser to various American public bodies
                        under President Kennedy (including Council
                        of Economic Advisers)

Franco Modigliani       Responsible for the development of the U.S.
                        model on behalf of the Federal Reserve Board