The Royal Swedish Academy of Sciences will announce its choice on Monday for the Nobel Memorial Prize in economics. As the day approaches, some of the world's best minds are engaged in a highly inexact science: predicting the winner.
The outcome is far from trivial. Though the winning work of Nobel laureates tends to be decades old, the prize confers great benefits beyond the purse of about $1.4 million, including a renewed influence in the public realm, canonical status and coveted bragging rights for the universities whose halls the laureates haunt. To date, the University of Chicago leads with nine laureates. Harvard has four, and MIT three....
Academics see several areas and names as "ripe" for a Nobel. Among the favorites: Harvard's Oliver Hart, whose work in contracts has helped economists understand why companies merge and split apart; Robert Wilson and Paul Milgrom, both of Stanford University, whose work in auction theory inspired the design of radio-spectrum selloffs; Columbia's Jagdish Bhagwati, whose work demonstrated that trade barriers are among the worst ways to solve domestic economic problems; and Chicago's Eugene Fama, whose idea that stock-price moves can't be predicted spawned a whole industry of specialized index funds.
Thomson Scientific, which produces an annual list of front-runners based on how many peers cite an economist's work, forecasts three possible combinations: Mr. Bhagwati, together with Princeton trade specialists Avinash Dixit and Paul Krugman; Mr. Jorgenson alone; and Mr. Hart, together with Bengt Holmstrom of Harvard and Oliver Williamson of Berkeley. Betting pools at Harvard and MIT favor Cambridge, Mass., locals such as Mr. Hart, Mr. Holmstrom and Harvard macroeconomist Robert Barro.
The following winners were on the Harvard faculty for part of their careers, sometimes very briefly: Kuznets, Merton, Arrow, Leontief, Schelling, Spence, Sen, and Fogel. But only the first four were on the faculty when they won the prize . We are, however, happy to take some credit for all of them, and also for those who were once students here, such as Samuelson, Solow, and Tobin.