Dubious economic nobility

Updated 19 Oct 2020

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The composition of the recipients of the Nobel Prize for Economic Sciences is bound to command attention. — AP/File
The composition of the recipients of the Nobel Prize for Economic Sciences is bound to command attention. — AP/File

The pandemic has reminded us that the issue of public health can’t be relegated to the sidelines. Honouring the path-setting work in health economics would have encouraged professionals working on this key dimension of the development matrix.

The recognition of the work of economists Paul R Milgrom and Robert B Wilson by the Nobel Prize Committee for developing the auction theory and inventing the auction format must be well-deserved, but to a common man adjusting to the new normal during the pandemic, it is not relatable. Is such a wide gap between the intellectual establishment and civil society desirable?

Besides, when the discussion on diversity has gained so much currency in public discourse, the composition of the recipients of the Nobel Prize for Economic Sciences is bound to command attention. So far, it is awarded almost always to economists aligned with top Western universities. True, thinkers from around the world gravitate towards recognised seats of learning, but it is hard to believe that nations like China and Japan achieved what they did without the help of their economic wizards. Perhaps limited translations of the ongoing economic research work in Chinese and Japanese languages pose challenges for the jury?

The world has not seen a bigger disruption than the current global health crisis in the post-war era. People, governments and businesses are struggling to sustain the economy, save lives and livelihoods. The pandemic shock exposed the neglect of health sciences and health infrastructure in societies of all shades across the world. It reminded us of the vitality of a universal health cover for the survival of mankind.

Nobel in economics is awarded mostly to economists from top Western universities. ‘Wisdom in economics is not an exclusive domain of rich, white males’

The UN secretary general hit the nail on the head when he reportedly said: “Everything we do during and after the crisis must be with a strong focus on building more equal, inclusive and sustainable economies and societies that are more resilient in the face of pandemics, climate change and other challenges we face.”

When requested, Dr Ali Cheema shared his views: “It is not unexpected that Paul Milgrom and Robert Wilson have been awarded the 2020 Nobel prize for their work, which has shifted the frontier in the theory and practice of auctions.

“However, I would have liked the prize to be awarded to economists working in the areas of political economy, institutions and inequality because these are the big structural challenges of our times.”

Dr Nadeem Javed, former chief economist at the Planning Commission, was candid. “The prize seems well-deserved as the auction theory has impacted the economic activity across the world particularly due to information communication technologies.

“For recognising the work of health economists in the given Covid-19 context, I feel there is no conclusive evidence so far regarding exceptional contribution of insight equipping governments with tools to better deal with the health crisis. Besides, the prize selection is based on the impact rather than the prevailing context.”

On the question of diversity in award recipients historically, he wrote: “Most of the economic research carried out by Japanese, Chinese and European economists does not per se fall in the ambit of hard-core capitalism. So it does not gain traction in the relevant circles (Cambridge University of the United Kingdom is an exception). Instituting more transparency in the nomination and selection process could add value to the whole exercise because the prize belongs to the field of economics rather than capitalism.”

Dr Saad Shafqat, a top neurologist with interest in socio-political issues, interpreting the selection of economists for Nobel, said: “My sense is that health economists are the lowest caste within the economics universe.”

An aspiring young economist mentioned the research of economists Amy Finkelstein and Katherine Baicker on the Oregon health insurance experiment. “Everyone who cares knows that their body of work is too compelling to be ignored for long. It is not to say that the work on auction theory and practice did not deserve recognition, but during the pandemic it would have made more sense if economists working on public health were celebrated.”

In 2008, the state of Oregon in the United States began the expansion of its Medicaid programme for poor adults. The limited resources nudge the authorities to allot available grants to applicants by lottery. The large dataset collected in the process allowed a randomised experiment with a controlled group of individuals picked up by lottery to enjoy the health cover.

She thought for the credibility in public eye, the referees will need to break out of the exclusive elite club of Stanford-Harvard -Chicago-Columbia and Cambridge universities. “Wisdom in economics is not an exclusive domain of rich, white males. They can’t keep it to themselves and their protégés forever. The point of choosing between exclusivity and relevance is not far,” she said, referring to professors who are part of the jury.

The Nobel Prize in Economics was an afterthought. It was awarded for the first time in 1969, exactly 68 years after the first distribution of Nobel prizes in 1901. Technically, it is decided, owned and funded by the central bank of Sweden that claims to apply the same principles used by the Nobel Foundation. Some see the roots of the economics award in the internal politics of Sweden; others see it as a game dominated by neo-liberals who seek to promote market-based models of development.

Published in Dawn, The Business and Finance Weekly, October 19th, 2020