US duo Nordhaus, Romer get Nobel for economics
William D Nordhaus of Yale University and Paul M Romer of New York University’s Stern School of Business won the 2018 Nobel Prize in Economics for bringing long-term 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 gauge the economic costs of global warming. In the 1990s, he became the first person to create a model that calculates the interplay between the economy and the climate. Human activity has contributed to the rapid increases in average global temperatures over the last 100 years. 2018 Economic Sciences laureate William Nordhaus’ research shows how economic activity interacts with basic chemistry and physics to produce climate change.
The focus of this year’s prize comes as the United Nations issues 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 had earlier this year stepped down as chief economist at the World Bank, has argued that policymakers should stop trying to fine-tune the business cycle and instead promote new technology. 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.
“Both their methods and the core questions they’re addressing in the research are of the utmost importance to human welfare,” said Jakob Svensson, professor of economics and director of the Institute for International Economic Studies at Stockholm University.