Skip to main content

Nobel Prize for economics awarded to two U.S. economists

By Chelsea J. Carter, CNN
updated 8:26 PM EDT, Mon October 15, 2012
The Swedish Royal Academy of Sciences present the winners of the Nobel Memorial Prize in Economic Sciences.
The Swedish Royal Academy of Sciences present the winners of the Nobel Memorial Prize in Economic Sciences.
STORY HIGHLIGHTS
  • NEW: U.S. economists win prize for study of market design and matching theory
  • NEW: Their work is used in education and organ transplants, among other things
  • Economics was added as a category in 1969 by the Swedish central bank
  • Two American professors also shared the 2011 Nobel Prize for economics

(CNN) -- Alvin E. Roth of Harvard University and Lloyd Shapley of UCLA have been awarded the Nobel Prize in economics for their work in market design and matching theory, the Royal Swedish Academy of Sciences announced Monday.

Roth and Shapley's work focuses on finding the most efficient way to match parties in a transaction, whether it be students to schools or organ donors to recipients, according to the academy.

Shapley used game theory to study matching models, and Roth built on them to make real-world changes to existing markets, including school choice and organ transplants, the academy said.

Elements of their work are built into software that guides kidney donations in the United States, as well as in school choice models in New York, Boston, New Orleans and other U.S. cities, Roth told reporters Monday.

U.S. economist Lloyd Shapley smiles outside his home in Los Angeles after being notified that he won the 2012 Nobel Memorial Prize for Economics on Monday, October 15. He and Alvin Roth share the award for their work in market design and matching theory. U.S. economist Lloyd Shapley smiles outside his home in Los Angeles after being notified that he won the 2012 Nobel Memorial Prize for Economics on Monday, October 15. He and Alvin Roth share the award for their work in market design and matching theory.
Economics, Lloyd Shapley
HIDE CAPTION
<<
<
1
2
3
4
5
6
7
8
9
10
>
>>
Photos: The Nobel Prize winners of 2012 Photos: The Nobel Prize winners of 2012
Barroso: EU deserves Nobel Peace Prize

Roth, who was awakened by an early morning call about their win, said he was not expecting the prize but was honored to share it with Shapley.

"I'm sure when I go to the class this morning my students will pay more attention," he said.

The economics prize is the sixth and final of the annual awards that spotlight the world's top scholars and peacemakers.

The economics award was not among the original prizes created in 1895 by Swedish industrialist Alfred Nobel to honor work in physics, medicine, chemistry, literature and peace. It was added as a category in 1969 by the Swedish central bank in memory of the industrialist.

As such, the economics prize is given by the Royal Swedish Academy of Sciences, following the same principles used to determine the other Nobel Prize winners, according to the Nobel committee.

The monetary award that accompanies the Nobel Prize was lowered by the foundation this year by 20% from 10 million Swedish kronor ($1.5 million) to 8 million kronor ($1.2 million) because of the turbulence that hit the financial markets.

The economics selection follows last week's awarding of the Nobel Peace Prize to the European Union, a selection that surprised many and drew scorn from Italian and Greek demonstrators who took to the streets to protest austerity measures.

Opinion: Nobel Committee wasted an opportunity in its Peace Prize

The 27-nation union was honored for its work in promoting democracy and reconciliation following World War II, even as it grapples with a financial crisis that threatens to break the EU apart.

Opinion: Why Europe deserved Peace Prize

"The Nobel committee is a little late for an April fools joke," said Martin Callanan, leader of the Conservatives and Reformists party in the European Parliament.

While Callanan called the Nobel committee "out of touch," others applauded the selection.

Another surprise was the Nobel committee's selection of Chinese writer Mo Yan as the winner of the Nobel Prize for literature.

The Chinese author, whose pen name means "not talking," has captivated his countrymen by intertwining fantasy and gritty everyday life.

Mo, a Communist Party member, is considered a writer within the system and has embraced official party restrictions on writing. He also was elected by the Communist Party to a vice chairman spot in the state-sanctioned China Writers Association.

Unlike the news blackout in China two years ago when Chinese dissident Liu Xiabo won the Nobel Peace Prize, state-run media reported Mo's win immediately following the announcement.

Patrick Poon of the Independent Chinese Pen Center said the award by the Nobel committee appeared to be a recognition of -- or attempt to please -- the Chinese government.

This year's prize for economics was selected from among hundreds of nominations, the Nobel committee said.

Two Americans shared the prize last year for their study of the cause-and-effect relationship between government and economic policy.

Thomas Sargent, a professor at New York University, and Christopher Sims, a professor at Princeton University, carried out their research independently, though their work was considered complementary.

Sargent and Sims received their doctorates from Harvard in 1968.

Read more: Nobel Peace Prize winner rips into fellow laureate over corruption

CNN's Ben Brumfield and Joe Sterling contributed to this report.

ADVERTISEMENT
Part of complete coverage on
updated 10:26 AM EST, Wed February 6, 2013
Advocates say the exam includes unnecessarily invasive and irrelevant procedures -- like a so-called "two finger" test.
updated 7:09 PM EST, Tue February 5, 2013
Supplies of food, clothing and fuel are running short in Damascus and people are going hungry as the civil war drags on.
updated 1:01 PM EST, Wed February 6, 2013
Supporters of Richard III want a reconstruction of his head to bring a human aspect to a leader portrayed as a murderous villain.
updated 10:48 AM EST, Tue February 5, 2013
Robert Fowler spent 130 days held hostage by the same al Qaeda group that was behind the Algeria massacre. He shares his experience.
updated 12:07 AM EST, Wed February 6, 2013
As "We are the World" plays, a video shows what looks like a nuclear attack on the U.S. Jim Clancy reports on a bizarre video from North Korea.
The relationship is, once again, cold enough to make Obama's much-trumpeted "reset" in Russian-U.S. relations seem thoroughly off the rails.
Ten years on, what do you think the Iraq war has changed in you, and in your country? Send us your thoughts and experiences.
updated 7:15 AM EST, Tue February 5, 2013
Musician Daniela Mercury has sold more than 12 million albums worldwide over a career span of nearly 30 years.
Photojournalist Alison Wright travelled the world to capture its many faces in her latest book, "Face to Face: Portraits of the Human Spirit."
updated 7:06 PM EST, Tue February 5, 2013
Europol claims 380 soccer matches, including top level ones, were fixed - as the scandal widens, CNN's Dan Rivers looks at how it's done.
updated 7:37 AM EST, Wed February 6, 2013
That galaxy far, far away is apparently bigger than first thought. The "Star Wars" franchise will get two spinoff movies, Disney announced.
updated 2:18 AM EST, Fri February 8, 2013
It's an essential part of any trip, an activity we all take part in. Yet almost none of us are any good at it. Souvenir buying is too often an obligatory slog.
ADVERTISEMENT