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— CH. 1 · INTRODUCTION —

Nobel Memorial Prize in Economic Sciences

~5 min read · Ch. 1 of 7
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  • The Nobel Memorial Prize in Economic Sciences carries one of the most recognizable names in all of science, yet it was never part of Alfred Nobel's original plan. When Sweden's central bank, Sveriges Riksbank, created the award in 1968 to mark its 300th anniversary, it set in motion a decades-long argument about prestige, authority, and who gets to wear the Nobel name. The prize has been awarded to economists, political scientists, and psychologists alike. It has sparked street protests, divided families, and prompted at least one laureate to say he wished the whole thing had never been created. What makes a prize this contested so enduring? And what does the fight over its legitimacy reveal about the discipline of economics itself?

  • Sveriges Riksbank founded the award not through Alfred Nobel's will but through its own endowment, established in 1968 to celebrate the bank's 300th anniversary and to honor Nobel's memory. The bank has paid the Nobel Foundation's administrative costs for the prize ever since, on an "in perpetuity" basis. Since 2006, that annual grant has stood at 6.5 million Swedish kronor, which in January 2008 was equivalent to roughly one million US dollars. The monetary value of the prize itself matches the other Nobel awards exactly; in both 2023 and 2024, the sum was 11 million Swedish kronor. The first award went out in 1969 to Dutch economist Jan Tinbergen and Norwegian economist Ragnar Frisch, recognized for developing and applying dynamic models for the analysis of economic processes.

  • Each September, the Academy's Economics Prize Committee, made up of five elected members, sends invitations to thousands of scientists, academy members, and university professors across many countries, asking them to nominate candidates for the coming year. Former laureates are also authorized to nominate. All proposals, along with their supporting evidence, must arrive before the first of February. The committee reviews those proposals with the help of specially appointed experts, then narrows the field by the end of September. If the committee reaches a tie, the chairman casts the deciding vote. In mid-October, the full membership of the Royal Swedish Academy of Sciences votes to name the winner or winners. No more than three people can share the prize in any single year. Candidates must be living at the time of the October announcement, and the details of any nomination stay sealed for fifty years.

  • Peter Nobel, a great-grandnephew of Alfred Nobel and a Swedish human rights lawyer, has been among the most pointed critics of the award. He accuses the awarding institution of misusing his family's name. Nobel states that no member of the Nobel family ever intended to establish a prize in economics. He has argued that Alfred Nobel despised people who cared more about profits than society's well-being, and that there is nothing to indicate Nobel would have wanted such a prize. Nobel described the prize's association with the original Nobel awards as "a PR coup by economists to improve their reputation." The prize's official name has itself shifted repeatedly over the decades, cycling through at least a dozen English variants between its first year in 1969 and its current official title, which took hold in 2006.

  • Herbert A. Simon, whose doctorate was in political science rather than economics, became the first non-economist to win the prize, taking the award in 1978 for his work in economics and organizational decision-making. The discipline's boundaries kept shifting. In February 1995, following internal acrimony over the 1994 prize to mathematician John Forbes Nash, the prize was formally redefined as a prize in the social sciences, opening the door to researchers in political science, psychology, and sociology. Daniel Kahneman, a professor of psychology and public affairs at Princeton University, won for work in behavioral economics. Elinor Ostrom and James Robinson, both political scientists, won in 2009 and 2024 respectively. The 1994 controversy also brought a rule change limiting Prize Committee members to three-year terms.

  • Friedrich Hayek used his speech at the 1974 Nobel Prize banquet to say that, had he been consulted, he would have "decidedly advised against" establishing a Nobel Prize in economics. His reasoning was specific: the prize confers authority over laypeople, politicians, journalists, and civil servants in a way that prizes in the natural sciences do not. Despite that warning, Hayek accepted the award. Former Swedish finance minister Kjell-Olof Feldt and former Swedish commerce minister Gunnar Myrdal both wanted the prize abolished. Milton Friedman's 1976 prize triggered international protests over his connections to economists linked to Augusto Pinochet's Chile, and his six-day visit to that country in March 1975. Four Nobel laureates, including Linus Pauling and David Baltimore, wrote letters to The New York Times in October 1976 protesting Friedman's selection. The 2013 prize drew its own criticism by simultaneously honoring Eugene Fama, a defender of the efficient-market hypothesis, and Robert Shiller, whose work challenges that very idea.

  • Three women have received the Prize in Economic Sciences since it was first awarded. Elinor Ostrom won in 2009, Esther Duflo won in 2019, and Claudia Goldin won in 2023. Goldin was the first woman to win the award on her own, without sharing it. Critics have pointed to the long absence of Joan Robinson from the list of laureates as evidence of bias toward mainstream economics within the selection committee. The prize is presented to each laureate by the King of Sweden at the annual Nobel Prize Award Ceremony in Stockholm, held on the 10th of December each year, the anniversary of Alfred Nobel's death.

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Common questions

When was the Nobel Memorial Prize in Economic Sciences established?

The Nobel Memorial Prize in Economic Sciences was established in 1968 by Sveriges Riksbank, Sweden's central bank, to mark the bank's 300th anniversary and to honor the memory of Alfred Nobel. The first prize was awarded in 1969.

Who won the first Nobel Prize in Economic Sciences?

The first Prize in Economic Sciences was awarded in 1969 to Dutch economist Jan Tinbergen and Norwegian economist Ragnar Frisch, recognized for having developed and applied dynamic models for the analysis of economic processes.

Is the Nobel Prize in Economics one of the original Nobel Prizes?

No. The Prize in Economic Sciences was not established by Alfred Nobel's will and is not one of the original five Nobel Prizes. It was created by Sveriges Riksbank in 1968, though it is administered by the Nobel Foundation and awarded at the same ceremony.

Which women have won the Nobel Prize in Economic Sciences?

Three women have received the prize: Elinor Ostrom in 2009, Esther Duflo in 2019, and Claudia Goldin in 2023. Goldin was the first woman to win the award solo.

Why is the Nobel Prize in Economics controversial?

Critics including Peter Nobel, a great-grandnephew of Alfred Nobel, argue the prize misuses the Nobel name and that Alfred Nobel would not have wanted it. Specific awards to Milton Friedman in 1976 and Robert Aumann in 2005 triggered protests, and Friedrich Hayek used his 1974 banquet speech to argue the prize grants economists undue authority over politicians and the public.

How is the Nobel Prize in Economics selected and what are the rules?

Each September, the Royal Swedish Academy of Sciences' five-member Economics Prize Committee invites thousands of scientists and professors worldwide to submit nominations, with all proposals due before the 1st of February. No more than three people may share the prize in a single year, candidates must be living at the time of the October announcement, and nomination details remain sealed for fifty years.

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All sources

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