Wednesday, October 17, 2012

Which is more like to win the Nobel Prize for Economics - Microeconomics or Macroeconomics?

The Nobel Prize was just awarded two days ago to two researchers in the field of Matching Theory, which has been used to match medical students to hospitals, and kidney patients to donors. Awesome stuff.

The most recent prize went to Microeconomics, then. However, Macroeconomics, historically, has had the largest haul, winning 43% of all Nobel Prizes since 1969. Microeconomics comes in at a close second, at 39%, while Econometrics and General Economics garnered a paltry 7% and 11% respectively. Should any aspiring Nobel Prize economist look towards Macroeconomics then?

The chart below plots Nobel Prize winners, by Economics field, over the years. We have blue for Macroeconomics, red  for Microeconomics, and so on. The early years -1969 to 1980 - was dominated by Macroeconomics, awarded to pioneers in general equilibrium, trade, economic development, and many other subjects.

The picture changes when you look at more recent years. With Macroeconomics maturing, economists turned their minds towards more focused, practical issues like how firms, organisations, and individuals interact, how people systematically exhibit irrationality, how people make decisions with inadequate information, and other areas. A wave of new discoveries were made in Microeconomics, and since 1980 over half of the Nobel Prizes went to Microeconomists, at the expense of the Macroeconomists who took only a third of the Prizes.

Should our aspiring Nobel Prize economist become a Microeconomist then? If history is any guide, Microeconomics' hey-day will eventually come to an end, and an area neglected by Prize winners - Econometrics - might soon come to dominate the awards. Time to take out the matrix algebra textbooks.

No comments:

Post a Comment