Today, it marked the 50th anniversary of the Nobel Prize in economics. The prize was awarded today to a pair of American economists, William D. Nordhaus and Paul M. Romer, for their work highlighting the importance of government policy in fostering sustainable economic growth. The prize money of 9 million Swedish krona ($1 million) will be split equally between the winners.
Mr. Nordhaus was honored for pioneering the assessment of the economic impact of climate change, including his advocacy for governments to tax carbon emissions. Mr. Romer was honored nobel prize for his work on the role of policy in encouraging technological innovation.
Economist William Nordhaus received the BBVA Foundation Frontiers of Knowledge Award in Climate Change for developing the first model capable of integrating economic and environmental data to identify the most efficient policies against global warming. Nordhaus is aware that his work has yet to translate into practical policy measures: “So far, virtually nothing has been done at the global level to slow climate change. We are moving in the right direction, but for every two steps forward, we take one step back. This is one of the most difficult political processes we are currently facing, because it forces us to impose costs now in order to protect the distant future, and that is a hard sell.” His latest book, released in 2013 with the title The Climate Casino, addresses the risks and socioeconomic uncertainty of a world threatened by climate change. “Climate,” he says, “is a casino in the sense that we are taking serious risks with our planet and ourselves. But we don’t need to walk into that casino, we can take steps now to mitigate and reduce the risks.”
Mr. Romer was the World Bank’s Chief Economist. In 2002, he received the Recktenwald Prize for his work on the role of ideas in sustaining economic growth. Before joining the World Bank group, he was Professor at New York University (NYU) and Director of the Marron Institute of Urban Management which deepens the study of cities to improve urban management; in addition, he was the founding director of the Urbanization Project at the Leonard N. Stern School of Business, which researches the many ways in which policymakers can use the rapid growth of cities to create economic opportunity and undertake systemic social reform. Romer has shown that economic forces govern the willingness of companies to innovate. The concept is the foundation of what is now called “endogenous growth theory,” which states that new ideas and technology help drive economic activity.
Both of them have designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth.
