U.S. Economists Win Nobel for Work on Climate Change, Innovation

Americans William Nordhaus and Paul Romer, pioneers in adapting the western economic growth model to focus on environmental issues and sharing the benefits of technology, won the 2018 Nobel Economics Prize on Monday.

In a joint award that turned the spotlight on a rapidly shifting global debate over the impact of climate change, the Royal Swedish Academy of Sciences said the duo’s work was helping to answer basic questions over how to promote long-term, sustainable prosperity.

Romer, of New York University’s Stern School of Business, is best known for his work on endogenous growth, a theory rooted in investing in knowledge and human capital.  He said he had been taken by surprise by the award, but offered a positive message.

“I think one of the problems with the current situation is that many people think that protecting (the) environment will be so costly and so hard that they just want to ignore them,” he told a news conference via telephone.  “We can absolutely make substantial progress protecting the environment and do it without giving up the chance to sustain growth.”
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Nordhaus, a professor of economics at Yale University, was the first person to create a quantitative model that described the interplay between the economy and the climate, the Swedish academy said.
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He said he was being honored for his work on carbon tax as a mechanism to reduce global warming.  “It was for work on one of the most important problems the globe faces, which is climate change,” he said.  “I’ve been working on that for almost 40 years, and the time’s ripe.”

Big Global Questions
Nobel committee chair Per Stromberg told Reuters Monday’s award was honoring research into “two big global questions”:  how to deal with the negative effects of growth on the climate and “to make sure that this economic growth leaves prosperity for everyone.”

Romer had shown how economic forces govern the willingness of firms to innovate, helping some societies grow many times faster than others.  By understanding which market conditions favor the creation of profitable technologies, society can tailor policies to promote growth, the academy said.

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