British professor who made name studying impact of falling wages on consumer demand was cited in more academic papers last year than any other economist
A British economist who made his name studying wages, taxes and household spending is among the frontrunners to win the economics Nobel prize when it is announced on Monday.
Analysis by Thomson Reuters found that Sir Richard Blundell, the Ricardo professor of political economy at University College London, was cited in more academic papers over the last year than any other economist, indicating that his research on the impact of falling wages on consumer demand has proved hugely influential.
Last year, the winner of the 8m Swedish krona (£630,000) award from the Royal Swedish Academy of Sciences was the Frenchman Jean Tirole, who is best known for his work analysing the monopolistic tendencies of big business.
An economist at Toulouse University, Tirole was praised by the academy for providing regulators with a method to control sectors dominated by a few large businesses, using game theory.
Blundell, also director of research at the tax and spending watchdog the Institute for Fiscal Studies, is another economist whose work is of practical application for policymakers.
He has studied the impact of the tax credits system on work incentives, for example, and the knock-on effects of wages on household consumption.
Blundell also served on the IFS’s Mirrlees Review, a panel of top tax experts that sought to rewrite Britain’s convoluted tax code for the 21st century.
Economics was not one of the disciplines covered by the original prizes set up in Alfred Nobel’s will, but the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was added to the roster in 1969, after a donation from the Swedish central bank.
A number of other economists are also thought to be in the running for Monday’s prize, which may be awarded to an individual, or a group of influential thinkers, as when Eugene Fama from the University of Chicago, his colleague Lars Peter Hansen and Yale’s Robert Shiller won in 2013. Each of them had their own theories detailing the flaws in free market theory, but shared the prize.
Sir Anthony Atkinson and Angus Deaton: inequality, consumption and wellbeing
This British duo were mentioned as possible winners last year when inequality became a hot subject following publication of Thomas Piketty’s hit economics book Capital.
A senior research fellow of Nuffield College, Oxford since 2005, Atkinson was a contributor to Piketty’s book and has an inequality index named after him. His book Public Economics in an Age of Austerity was published last year. Always prolific, earlier this year Harvard University Press published his latest, Inequality: What Can Be Done?.
Deaton is known for his work on health, wellbeing, and economic development. He is the Dwight D Eisenhower professor of economics and international affairs at the Woodrow Wilson School of Public and International Affairs at Princeton.
Bill Nordhaus, William Baumol, Sir Partha Dasgupta: environmental economics
With only a month to go before the Paris climate change summit, could environmental science steal the 2015 prize?
Nordhaus is an economics professor at Yale’s school of forestry and environmental studies while Baumol, who is 93, works at New York State University where he has lobbied for the inclusion of environmental improvements in the national accounts. Dasgupta, an economics professor at Cambridge, asks why the natural environment is not considered an asset that is destroyed when it is concreted over.
Ben S Bernanke, Frederic S Mishkin, Michael Woodford and Lars Svensson: inflation targeting by central banks
The famous monetarist economist Milton Friedman wanted central banks to stick to the narrow task of keeping inflation low and stable, primarily by monitoring and manipulating the supply of money.
In the 1990s, Bernanke, the recently retired boss of the US Federal Reserve, warned in a paper written with Mishkin that this limited remit would prevent central banks from rescuing troubled economies when inflation remained low. His work was influential in informing the wave of quantitative easing undertaken by central banks since the global financial crisis.
It might be an odd moment to award the prize to Bernanke, whose legacy as a monetary policymaker is still under consideration.
Woodford is the John Bates Clark professor of political economy at Columbia University and Svensson is visiting professor at the Stockholm School of Economics. Both have worked on what central banks can do to rekindle growth when interest rates are already close to zero. Svensson is a former deputy governor of the Swedish central bank.
William Baumol: health spending
Baumol has also worked tirelessly to analyse health costs, which are escalating as western populations age. His hypothesis in 1966 suggested that the costs of education and healthcare would continue to rise in relative terms, creating a significant economic burden, something that has come to pass, especially in the US where health costs have almost reached 20% of GDP.
Ken Rogoff and Carmen Reinhart: financial crashes
Rogoff and Reinhart are Harvard economics professors whose major contribution since the financial crisis has been to trace the history of financial collapses over the last 800 years. They are much admired by George Osborne for arguing that sovereign debts become destabilising beyond a certain level. But a book supporting their thesis was later found to be seriously flawed. They refined their research and came to the same conclusions, but the controversy tarnished their reputations.
