Why Paul Romer and William Nordhaus won the Nobel Prize in economics

Monday, October 8th, 2018

Tyler Cowen explains why Paul Romer won the Nobel Prize in economics and why William Nordhaus won the Nobel Prize in economics:

These are excellent Nobel Prize selections, Romer for economic growth and Nordhaus for environmental economics. The two picks are brought together by the emphasis on wealth, the true nature of wealth, and how nations and societies fare at the macro level. These are two highly relevant picks. Think of Romer as having outlined the logic behind how ideas leverage productivity into ongoing spurts of growth, as for instance we have seen in Silicon Valley. Think of Nordhaus as explaining how economic growth interacts with the value of the environment.


  1. Bruce Charlton says:

    I critiqued Romer in my ‘Not even trying’ mini-book – https://corruption-of-science.blogspot.com/:

    ” By assuming that growth in researchers and publications will continue, we implicitly assume that there is an unbounded quantity of new and useful science waiting to be discovered and an unrestricted pool of people capable of making discoveries.

    The economist Paul Romer – and others – built this into theories of the modern economy – the argument is that continued growth in science and technology fuels continual improvement in productivity (economic output per person) and therefore growth in the economy. Some of this economic growth is invested into science (education and employment of personnel and capital equipment) to drive further economic growth.

    The idea is: Increased science leads to increased productivity leads to increased science. The idea is that we are continually getting better at scientific discovery, because we are continually investing more in scientific discovery, therefore modern society is enabled to continue economic growth – pretty much forever…
    Plausibility aside, how would we know whether real science was growing? (Useful new science, that is, as contrasted with the mere volume of publications and other communications – which is simply a matter of words, pictures and numbers.)

    Who could evaluate whether change is real science not hype; and whether increased amounts of self-styled scientific stuff (publications, personnel, laboratories etc.) actually corresponded to more and better real science?
    Why should the default assumption be that increased size of science as a professional activity corresponds to increased knowledge?
    When scientific growth is expected, and when society acts-upon the expectation, we have an overwhelming assumption of growth in science, an assumption that science is growing – but that assumption says nothing at all about whether there really is growth.

    Indeed, so strong is the assumption that science is progressing that we have a situation where a critic of science is expected to prove the negative – that science is not growing. This is remarkable – instead of scientists and the funders of science having to prove that they are making progress we have a situation where the progress is assumed (unless proven otherwise).

    We have a situation where every scientific publication (once it has been published) is nowadays presumed to be valid (unless proven otherwise).

    This was not always the case! – to put it mildly.

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