The Nobel prize in economics or the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel was awarded to Daron Acemoglu, Simon Johnson and James A Robinson “for studies of how institutions are formed and affect prosperity.”
The laureates’ model for understanding how political institutions are created and transformed consists of three key components.First, it addresses the conflict regarding resource allocation and decision-making authority, whether it lies with the elite or the masses. Second, it highlights that the masses can sometimes mobilize and pose a threat to the ruling elite, indicating that power extends beyond mere decision-making authority. Lastly, it introduces the commitment problem, suggesting that the elite may ultimately need to relinquish decision-making power to the general population.
Why they got the award:
This year’s laureates have shed light on the significant disparities in prosperity among nations, with one key explanation being the enduring differences in societal institutions.
By analyzing the political and economic systems established by European colonizers, Daron Acemoglu, Simon Johnson, and James Robinson have illustrated the connection between institutions and prosperity. They have also created theoretical frameworks that explain why these institutional differences persist and how they can evolve over time.
The Indian laureates:
Amartya Sen: He was awarded the prize in 1998 “for his contributions to welfare economics.” His work stems from a focus on distribution issues, particularly concerning the most vulnerable members of society. Sen’s research has explored famines to gain a better understanding of the economic factors contributing to famine and poverty.
Abhijit Banerjee: He was awarded in 2019 “for their experimental approach to alleviating global poverty.” Abhijit Banerjee, Esther Duflo, and Michael Kremer have pioneered a new method for finding reliable solutions to combat global poverty by breaking the issue down into smaller, more manageable questions. Since the mid-1990s, they have tested various interventions in different sectors through field experiments, focusing on areas like educational improvement and child health.
All about the prize:
- The selection of laureates in economic sciences is the responsibility of the
Royal Swedish Academy of Sciences . - Founded in 1739, the Academy currently has around 470 Swedish members and 175 foreign members. Membership signifies prestigious recognition of outstanding research accomplishments. The Academy also appoints members to the Prize Committee, which serves a three-year term.
- The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded 55 times to 93 laureates from 1969 to 2023.
- The youngest laureate is Esther Duflo who was awarded at the age of 46 in 2019. She was awarded “for their experimental approach to alleviating global poverty.”
- The oldest economic sciences laureate is Leonid Hurwicz who was awarded at the age of 90 years old in 2007. He was awarded “for having laid the foundations of mechanism design theory.”
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