Surprise at the award of this year’s Nobel Prize for Economics: It goes to the former US Federal Reserve Chairman Ben Bernanke and to the two economists Douglas W. Diamond and Philip H. Dybvig, said the Royal Swedish Academy of Sciences in Stockholm. Bernanke, former Fed President, and the other two economists will receive the prestigious award “for their research into banks and financial crises,” said the academy’s secretary-general, Hans Ellegren, at the announcement on the university campus in the Swedish capital.
What is particularly unusual this year is that the prize goes to an economist who has had ample opportunity to test his theories in practice. From 2006 to 2014, Ben Bernanke, 68, was President of the US Federal Reserve, or Fed for short. The global financial crisis of 2007 and 2008 in particular fell during his term of office. It is probably thanks to his commitment that the crisis in September 2008 after the collapse of the Lehman Brothers bank was contained at the last moment and the world did not plunge into a catastrophic depression as in the Great Depression of 1929.
Understanding the Great Depression is the “Holy Grail of Economics”
Bernanke was able to draw on his own scientific work. The economist had been researching the global economic crisis since the 1980s, first at Stanford and then at Princeton. He once described understanding this crisis as the “Holy Grail of economics”. Today, Bernanke works at the Brookings Institution, a think tank in Washington.
In addition to Bernanke, the two US economists Douglas W. Diamond (University of Chicago) and Philip H. Dybvig (Washington University in St. Louis) were also honored. All three have made a decisive contribution to “better understanding the role of banks, especially in financial crises,” according to the Nobel Committee statement. It is important to understand why banks should be avoided in a crisis.
Unlike the other Nobel prizes, the one for economics does not go back to Alfred Nobel’s legacy, but was donated by the Swedish Reichsbank in 1968. It is worth almost 900,000 euros and will be presented in Oslo on December 10th together with the other Nobel Prizes.
The Nobel Prize in economics has only been awarded since 1969 and is endowed with ten million crowns (about 913,000 euros). It is donated by the Swedish central bank. With the award, it takes account of the growing importance of economic issues.
Last year, the US-based economists David Card, Joshua Angrist and Guido Imbens were honored with the prestigious award.
This means that all Nobel Prize winners for this year have been announced. The names of the winners in the categories medicine, physics, chemistry, literature and peace had already been announced over the past week. The Nobel Prizes are traditionally presented at a ceremony on December 10th, the anniversary of the death of prize donor and dynamite inventor Alfred Nobel (1833-1896). All Nobel prizes this year are again endowed with ten million Swedish crowns. That’s the equivalent of almost 915,000 euros at the moment.
So far there has only been one award winner from Germany
The Nobel Prize in Economic Sciences is the only one of the Nobel Prizes that does not go back to the will of Alfred Nobel (1833-1896), inventor of the dynamite and founder of the prize. It has been donated by the Swedish Reichsbank since the late 1960s and is therefore not, strictly speaking, one of the classic Nobel Prizes. Nevertheless, like the other Nobel prizes, it will be ceremoniously presented on the anniversary of Nobel’s death, December 10th. In general, the Nobel Prize in Economics very often goes to economists who come from the USA or do research there. So far, the only German prizewinner in this category has been the Bonn scientist Reinhard Selten: He received the award in 1994 together with John Nash and John Harsanyi for their groundbreaking contributions to non-cooperative game theory.