This Nobel Rewards the Right Kind of Economics
Building elegant little models is passé. The future of econ is rigorous, empirical, and always engaged with the real world.
Economics in action.
Photographer: Spencer Platt/Getty Images
At its best, economics poses a simple question: What makes people better off, and how can we have more of it? This year, the Nobel committee has rightly chosen to honor two academics, William Nordhaus and Paul Romer, who have demonstrated a rare dedication to finding answers — and to making the case for action.
Economic growth can be a powerful generator of human well-being, but there’s always debate over the extent to which governments can or should try to shape it. Some argue that it’s always best to trust markets: Let people and companies pursue their self-interest, and they’ll generally produce the best possible result for society. In different ways, Nordhaus and Romer showed that the right kind of government action is sometimes imperative.