Nobels go to two U.S. profs
Work focuses on climate change and technology
OSLO, NORWAY • William Nordhaus of Yale University and Paul Romer of New York University’s Stern School of Business won the 2018 Nobel Prize in Economics for bringing longterm thinking on climate issues and technological innovation into the field of economics.
The two Americans “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,” the Royal Swedish Academy said on Monday.
Nordhaus, 77, began working on environmental issues in the early 1970s as part of an effort to put an economic costs on global warming. In the 1990s, he created the first model that calculates the interplay between the economy and the climate.
The focus of this year’s prize comes as the United Nations issued a dire warning on the urgent need to address climate change.
Nordhaus has long cautioned that it’s “unlikely” that nations can achieve the targets set in the landmark Paris Agreement and that policy delays are raising the price of carbon needed to achieve the goals.
Uncertainty is no excuse for inaction, he said. “When the major parametric uncertainties are included, there is virtually no chance that the rise in temperature will be less than the target 2°C without more stringent and comprehensive climate change policies.”
The 62-year-old Romer, who at the start of this year stepped down as chief economist at the World Bank after a rocky term, has argued that policy-makers should stop trying to finetune the business cycle and instead harness technology to foster growth.
His work published in 1990 has served as the foundation for what’s called “endogenous growth theory,” a rich area of research into the regulations and policies that encourage new ideas and long-term prosperity.
Romer said he started investigating why economic growth was speeding up and came to realize in part it was due to the fact more people were connected by technology. “Globalization is just not about trading stuff,” he said at a press conference in New York. “It’s about sharing ideas.”
He also issued a warning on the current political debate. “Even though I remain optimistic about technological development, we’re starting to lose our commitment to the facts,” he said.
The 2018 awards not only coincide with the UN’s warning on the growing threat of climate change, but they come a little over a year after U.S. President Donald Trump dragged the world’s biggest economy out of the Paris climate accord.
The Swedish academy said that Nordhaus and Romer “do not deliver conclusive answers, but their findings have brought us considerably closer to answering the question of how we can achieve sustained and sustainable global economic growth.”
Nordhaus earned a doctorate in economics from the Massachusetts Institute of Technology. Romer, a native of Denver, is the son of Roy Romer, a former governor of Colorado.