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US ‘green growth’ duo win Nobel Economics Prize
STOCKHOLM, Oct 8, 2018 (BSS/AFP) – US economists William Nordhaus and Paul
Romer on Monday shared the 2018 Nobel Economics Prize for constructing “green
growth” models that show how innovation and climate policies can be
integrated with economic growth.
Working independently, they have addressed “some of our time’s most basic
and pressing questions about how we create long-term sustained and
sustainable growth,” the Royal Swedish Academy of Sciences said in a
statement.
The academy said their models, both developed in the 1990s, have
“significantly broadened the scope of economic analysis”.
The prize announcement came as the UN warned in a landmark report that an
“unprecedented” transformation of society and the world economy was needed to
avoid global climate chaos.
It said time was running out to avert disaster, noting that our plant’s
surface has already warmed one degree Celsius (1.8 degrees Fahrenheit).
“The policies are lagging very, very far – miles, miles, miles – behind the
science and what needs to be done,” Nordhaus, a professor at Yale University,
told the Swedish Academy after the prize’s announcement, referring to US
president Donald Trump’s withdrawal from the Paris climate accord.
“We are actually going backwards in the United States with the disastrous
policies of the Trump administration,” the 77-year-old added.
Romer, a former World Bank chief economist now at New York University’s
Stern School of Business, said he was confident the world could reduce
greenhouse gas emissions and still improve standards of living in the future.
“We can absolutely make substantial progress to protecting the environment,
and without giving up the chance for sustained growth,” he said.
“One of the problems with the current situation is that many people think
that dealing with protecting the environment will be so costly and so hard
that they will ignore the problem and deny it exists,” he said.
“I hope the prize will help people see humans are capable of amazing
accomplishments when we try to do something.”
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– ‘Achieving sustainable growth’ –
The jury said that while Nordhaus and Romer “do not deliver conclusive
answers … their findings have brought us considerably closer to answering
the question of how we can achieve sustained and sustainable global economic
growth.”
Nordhaus was specifically honoured for “integrating climate change into
long-run macroeconomic analysis.”
His “integrated assessment model” was created in the 1990s and combines
theories and empirical results from physics, chemistry and economics.
It is now widely “used to simulate how the economy and climate co-evolve”
and to examine the consequences of climate policy interventions, for example
carbon taxes.
Nordhaus’s research shows that the most efficient remedy for problems
caused by greenhouse gas emissions is a global scheme of carbon taxes
uniformly imposed on all countries.
Countries refusing to take part in the scheme could be subjected to customs
tariffs.
The 62-year-old Romer meanwhile won the prize for “integrating
technological innovations into long-run macroeconomic analysis”.
Complementing Nordhaus’ research, Romer laid the foundation for “endogenous
growth theory”, which explains how ideas are different to other goods and
require specific conditions to thrive.
His research demonstrated how economic forces govern the willingness of
companies to produce new ideas and innovations.
Romer resigned from the World Bank in January 2018 after raising questions
about how the institution was ranking countries.
– December 10 ceremony –
Both Nordhaus and Romer have been tipped as frontrunners for the Nobel
Prize in recent years.
The pair will share the nine million Swedish kronor (about $1.01 million or
860,000-euro) prize.
Last year, the honour went to US economist Richard Thaler, a co-founder of
the so-called “nudge” theory.
That theory demonstrates how people can be persuaded to make decisions that
leave them healthier and happier.
Unlike the other Nobel prizes, which were created in Swedish inventor and
philanthropist Alfred Nobel’s will and first awarded in 1901, the economics
prize was started by the Swedish central bank in 1968 to mark its
tricentenary. It was first awarded in 1969.
The prize, which also consists of a diploma and a gold medal, will be
presented at a formal ceremony in Stockholm on December 10.
The economics prize wraps up the 2018 Nobel awards season, notable this
year for the lack of a literature prize.
That award was postponed by a year for the first time in 70 years over a
rape scandal that came to light as part of the #MeToo movement. The awards
for medicine, physics and chemistry were announced last week as was the most
highly anticipated Nobel, the peace prize.
It went to Yazidi women’s campaigner Nadia Murad and Congolese doctor Denis
Mukwege for their work in fighting sexual violence in conflicts around the
world.
BSS/AFP/FI/ 2152 hrs