Economists William D. Nordhaus and Paul Romer shared the Nobel Prize for their environmental and economic work.
Two American economists have been awarded this year’s Nobel Prize in Economic Sciences. The $1 million prize was divided equally between William D. Nordhaus and Paul Romer for their separate work into environmental and economic sustainability.
“This year’s Laureates have designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth,” said the Royal Swedish Academy of Sciences in a press release.
Nordhaus, a professor of economics at Yale University, is most notable for his work in climate economics. His work in the field started in the 1970s, when climate scientists began to take increased notice of negative environmental effects resulting from the combustion of fossil fuels.
In the 1990s, two decades into his research, Nordhaus developed the first integrated assessment model, which quantifies the relationship between the climate and the economy by combining theories and models from chemistry, economics and physics. Nordhaus’ integrated assessment model is now widely used by climate economists as a determinate as to whether climate policy intervention is necessary. One example of the model’s use in the field is gauging how implementing a carbon tax would impact the environment.
Romer, a professor at the NYU Stern School of Business, received the other half of this year’s award “for integrating technological innovations into long-run macroeconomic analysis,” as described by the Royal Swedish Academy of Sciences. Romer is best known for his research into how economic factors affect firms’ development of new technologies, which are often thought of as the driving force behind economic progress.
Romer published his work dealing with drivers of technological progress in 1990. He laid out his seminal endogenous growth model, which takes advantage of the non-rivalrous aspect of new knowledge (the idea that firms which develop new concepts cannot be the only ones to capitalize on them). Romer’s work is particularly interested in how external factors, such as financial incentives for new research and intellectual property protections, affect the speed at which new knowledge spreads across firms globally.
Following the announcement of the prize winners, Romer commented, “Many people think that protecting the environment will be so costly and so hard that they just want to ignore the problem,” adding, “I hope the prize today could help everyone see that humans are capable of amazing accomplishments.”
Although neither Romer or Nordhaus provided specific answers or conclusions in their respective research, they both enriched their field with important tools to continue the study of economic and environmental sustainability.