Tag Archives: nobel prize

Why Thomas Sowell Never Got a Nobel Prize

From Wikipedia: ‘On the right and in conservative and libertarian quarters, Sowell is lauded as a “giant”,[40] brilliant,[41] one of the most original[42] and prolific intellects of our time,[43] “a national treasure.”[44] and someone to whom a Nobel Prize should have been awarded long ago.’

So why, in spite of his prolific output spanning six decades, including thirty books and thousands of articles and other commentary, has the greatest prize of all, the Nobel Prize, still eluded him? Is he being snubbed due to prejudice? He’s world-renowned, his articles syndicated on major sites such as Town Hall and National Review, read by millions, and even many on the ‘left’ can find common ground in Sowell’s support of legalization of drugs or his ‘theory’ on how late-talking children are really smart.

So why no Nobel?

There’s a common misunderstanding about how Noble Prize is awarded, specifically the criteria that must be met. Although the recipient must be alive, most importantly, the Nobel Prize is not a lifetime achievement award – rather, Obama’s farcical Nobel notwithstanding, it’s for a specific discovery or finding that has a major, rippling impact on its respective field. This means it has to be a very specific and original, published in a peer-reviewed journal, and that either answers a very important question, challenges a pre-existing theory, and or opens up a new field of research.

Some notable examples in the field of economics, in which whose originators were awarded the Nobel Prize, include:

The Market for Lemons

“The Market for Lemons: Quality Uncertainty and the Market Mechanism” is a 1970 paper by the economist George Akerlof which examines how the quality of goods traded in a market can degrade in the presence of information asymmetry between buyers and sellers, leaving only “lemons” behind. A lemon is an American slang term for a car that is found to be defective only after it has been bought.

George Akerlof was awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2001 for his paper because ‘information asymmetry’ challenges the neoclassical model that assumes ‘perfect information’ (all parties have the same information).

“The Pricing of Options and Corporate Liabilities”

Merton and Scholes received the 1997 Nobel Memorial Prize in Economic Sciences for their work on option pricing, specifically, in 1973, for finding a way (the Black–Scholes formula) to price options in lieu of a ‘drift’ parameter, or in more technical terms, ‘risk-neutral pricing’. The original Black–Scholes formula spawned a considerable amount of follow-up research, in addition to being used to price options on the CME and CBOT, and giving birth to the field of quantitative finance.

“Equilibrium Points in n-Person Games, by John F. Nash”

The eponymous ‘Nash Equilibrium’, in which for certain scenarios the best outcome (an equilibrium point) is achieved through cooperation instead of competition, challenged the assumptions of Adam Smith that competition leads to the best outcome:

Adam Smith claimed that if each person in society worked to optimize his welfare the whole society would have the optimal welfare, but on the other hand, John Nash proved by his work on Game theory that in certain cases optimal solution for the individuals could lead to the sub optimal solution for the.entire society.

In 1994, Nash received the Nobel Memorial Prize in Economic Sciences (along with John Harsanyi and Reinhard Selten) for his paper, which he wrote in his mid-20′s in 1952 having only taken a few economics courses at the time. Pretty impressive.

“Prospect Theory: An Analysis of Decision under Risk (1979)”

In 2002, Daniel Kahneman and Amos Tversky received the Nobel Memorial Prize in Economics for developing prospect theory, which launched the field of behavior economics. The theory, roughly, states people have an asymmetrically large aversion to losses than desire for gains, whereas conventional theory assumes there is no asymmetry.

“Do stock prices move too much to be justified by subsequent changes in dividends?”

In 1981 Robert Shiller published an article in The American Economic Review titled “Do stock prices move too much to be justified by subsequent changes in dividends?” in which he challenged the efficient-market hypothesis, which was the dominant view in the economics profession at the time. In 2013, Eugene Fama, Lars Peter Hansen and Shiller jointly received the 2013 Nobel Memorial Prize in Economic Sciences their work on asset pricing.

That’s enough examples. To my surprise, Nash, who died in 2015, only published a single math book in his lifetime – a small compilation of game theory essays – but he also published some books on Christianity. Merton, Black and Scholes, developers of the Black–Scholes formula, wrote no books. A Google search shows three books for Daniel Kahneman, including his 2011 best-seller Thinking, Fast and Slow. George Akerlof published five books. Combined, that’s still far fewer than Sowell’s thirty. Although books are much longer than papers and therefore seem more substantive, somewhat counterintuitively they have less clout in academia than papers. This is because books are not subject to same high peer review standards as papers, and also because books tend to rehash a lot of information. Thus, the Nobel committee tends to overlook books, in favor of peer reviewed papers with a lot of citations.

Going over Sowell’s biography on Wikipedia, although there are a lot of books, there are no papers aside from his PHD thesis.

Sowell has also written a trilogy of books on ideologies and political positions, including A Conflict of Visions, where he speaks about the origins of political strife; The Vision of the Anointed, where he compares the conservative/libertarian and liberal/progressive worldviews; and The Quest for Cosmic Justice, where, like in many of his other writings, he outlines his thesis of the need for intellectuals, politicians and leaders to fix and perfect the world in utopian, and ultimately he posits, disastrous fashions. Separate from the trilogy, but also in discussion of the subject, he wrote Intellectuals and Society, where he discusses what he argues to be the blind hubris and follies of intellectuals in a variety of areas, building on his earlier work.

Sowell challenges the notion that black progress is due to progressive government programs or policies, in The Economics and Politics of Race, (1983), Ethnic America (1981), Affirmative Action Around the World (2004), and other books. He claims that many problems identified with blacks in modern society are not unique, neither in terms of American ethnic groups, nor in terms of a rural proletariat struggling with disruption as it became urbanized, as discussed in his book Black Rednecks and White Liberals.

It would seem like Sowell is more of an ‘economic historian’ and ‘explainer’ than someone who theorizes or has many original ideas, and that’s why the Nobel has still eluded him. His obserserations are trenchant, but that’s not enough. The main problem is the dearth of peer reviewed papers.

Interestingly, Sowell has received considerable attention for something unrelated to economics – his so-called ‘Einstein Syndrome’ theory:

Sowell wrote The Einstein Syndrome: Bright Children Who Talk Late, a follow-up to his Late-Talking Children, discussing a condition he termed Einstein syndrome. This book investigates the phenomenon of late-talking children, frequently misdiagnosed with autism or pervasive developmental disorder. He includes the research of—among others—Professor Stephen Camarata, Ph.D., of Vanderbilt University and Professor Steven Pinker, Ph.D., of Harvard University in this overview of a poorly understood developmental trait. It is a trait which he says affected many historical figures. He discusses late-talkers who developed prominent careers, such as physicists Albert Einstein, Edward Teller and Richard Feynman; mathematician Julia Robinson; and musicians Arthur Rubenstein and Clara Schumann. He makes the case for the theory that some children develop unevenly (asynchronous development) for a period in childhood due to rapid and extraordinary development in the analytical functions of the brain. This may temporarily “rob resources” from neighboring functions such as language development. Sowell disagrees with Simon Baron-Cohen’s speculation that Einstein may have had Asperger syndrome (see also people speculated to have been autistic).[27]

The success of this theory probably has more to do with an appealing narrative, than any scientific rigor. The reality, which is that delayed-talking is almost always associated with generalized mental delay, is not what people, especially parents, want to hear, instead taking solace in the delusion that their kid may be the ‘next Einstein’. But for every kid who has delayed speech and is brilliant and gets a lot of media coverage (an example being the physics and math prodigy Jacob Barnett, who didn’t speak until he was four but mastered calculus at age 11), the majority of late-takers are simply slow and there is no media coverage. Nowadays, late-talking and other signs of mental impairment are labeled as ‘autism’ (which could explain the surge in autism diagnosis in recent years) instead of ‘retardation’ or ‘borderline-retardation’, as an example of how America’s increasingly politically correct society is more worried about not ‘offending people’ than acknowledging reality:

Euphemism treadmill in action

Although many book and articles have been written about the subject, not surprisingly, Sowell’s ‘Einstein syndrome’ has not passed peer review.

Obama Should Give His Nobel Prize to Bernanke

If Obama can get a Nobel Prize for doing nothing (and then later being a lousy president), maybe Bernanke deserves one for merely saving the economy in 2008?

Full employment without inflation is in sight. The central bank did its job. What about everyone else?

Agree, the central bank did a good job by stemming the bleeding. The consumer did its job by consuming. And Silicon Valley did a good job by innovating. But Obama? No. Obama’s presidency has been marred by great failures: foreign policy (Syria, Iraq, and Afghanistan), the economy (cash for clunkers, the Dodd Drank bill which predictably did nothing, and a failed trillion-dollar stimulus that didn’t create jobs, and more), domestic issues (siding with looters and against the police in the Treyvon Martin and Michael Brown deaths, blaming the ‘gun lobby’ and the NRA for shootings), and healthcare (Obamacare, which will greatly add to the deficit in upcoming years at little benefit).

Even Reuters, which tends to be impartial, can’t help but to notice the abject failure of Obama’s Middle East policy:

In Syria, U.S.-trained rebels surrender supplies and ammunition to al Qaeda-linked insurgents. In Iraq, the battle by American-backed government forces against Islamic State is at a stalemate. In Afghanistan, the Taliban seize a provincial capital for the first time since their ouster in 2001.

The administration is also weighing a proposal to scale back its failed $580 million program to train Syrian rebels to battle Islamic State, U.S. officials said.

The Obama doctrine has floundered partly due to weak national governance in Iraq and Afghanistan, and the failure of moderate Syrian opposition groups to overcome their rivalries.

Putin, in taking the initiative in Syria and Iraq, is making Obama look like a bigger wimp than otherwise thought possible.

Even liberals will admit Obama failed, for not being liberal enough, but a failure nonetheless. The overall consensus by economists is that Obama’s policies contributed little, if any, to the post-2008 recovery. It was Bernanke and Geithner (the Competent Duo) who did all the heavy lifting, with Obama taking all the credit similar to how he took credit for the killing of Bin Laden despite the fact all the important intelligence work was done by the prior administration, and that Bill Clinton ignored intelligence warnings about Osama. Had Bush been given another four years, not only would the stock market have surged, but the economic recovery would have been stronger because there would have been no Obamacare or budget impasses.

Does anyone honestly see a light at the end of this tunnel of prosperity, or are we delusional to believe it’s a freight train heading right at us? The 2nd (or was it 3rd? Whatev) LONGEST Bull market in US HISTORY just occurred….F”N history!! And it’s going to keep going, thanks to consumer spending, low interest rates, exports, rich foreign consumers, and the economic and scientific contributions of high-IQ people both in America and all over the world.

Profits, earnings, and stock prices keep making new highs:

Higgs boson today, Grand Unified Theory of Everything tomorrow? All over the world, from Silicon Valley to Manhattan, from Caltech to MIT, smart, high-IQ people are innovating, creating wealth for themselves and the broader economy.

(the ADS/CFT correspondence showing how quantum effects are on a lower dimensional boundary than relativistic/gravitational ones)

Bernanke, in saving the day in 2008, threw a lifeline for smart people, mitigating the mistakes made by dumb people so that the healthier parts of the economy (web 2.0, technology, retail) could thrive without being weighed-down by the ailing sectors (housing, financial).

The bailouts are interesting because it’s an application of pragmatism and consequentialism, both pillars of ‘grey enlightenment’ – the bailouts being an example of policy that is unpopular and anti-populist but a success. The system may occasionally suck, but it works. Things do get better, and those who hold their stocks amid the panic can reap substantial gains. Typically, there is no problem that can’t be easily remedied by super efficacious policy in congress and global central bank coordination, although the growing entitlement spending problem could be a concern down the road. Congress deserves a round of applause for saving the financial system in 2008 and not impeding in the subsequent economic & stock market boom with excess regulation and activism. Bernanke deserves a Nobel Prize for defying all the critics and enacting what may be the most successful monetary (or any policy for that matter) policy in the recent history of the United States, even more so than the lionized former fed chairman Paul Volcker who in the early 80′s caused the market to crash and the economy to enter a severe recession by unnecessarily raising interest rates too quickly.