Home > The Economics Profession > The Sveriges Riksbank Nobel Prize in Freshwater Economics for 2013 goes to Eugene Fama

The Sveriges Riksbank Nobel Prize in Freshwater Economics for 2013 goes to Eugene Fama

from Lars Syll

In a  post last year yours truly wrote about the decision of The Royal Swedish Academy of Sciences  to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2012 to Alvin Roth and Lloyd Shapley. I complained that the prize committee once again confirmed that neoclassical economic theory today basically is in the story-telling business whereby economic theorists create make-believe analogue mathematical models of the real economic system.

This year I’m sure the prize committee will show how in tune with the times it is and award the prize to Eugene Fama.

Why?

chicago

1) Well, he’s a Chicago economist and a champion of rational expectations and efficient markets.

2) Nowadays freshwater economists seem to be the only ones eligible for the prize.

3) An economist who has described the notion that finance theory was at fault as “a fantasy” and argued that “financial markets and financial institutions were casualties rather than causes of the recession” has to appeal to a prize committee with a history of awarding theories and economists totally lacking any real world relevance.

  1. Bruce E. Woych
    October 8, 2013 at 4:01 pm

    it’s a sham.

  2. sergio
    October 8, 2013 at 4:54 pm

    No way. Committee knows that neoclassical economics is dead.

  3. October 8, 2013 at 7:08 pm

    I have concluded in a comment on another post:

    “Economics is a scam, based on a false scientific claim, which is now allowing extreme monetary policies unproven theoretically or empirically to be tested on world as an unfolding catastrophe. We have to stop this scam.”

    The Sveriges Riksbank Prize (not a Nobel Prize) is part of the scam to divert the study of economics to a cul-de-sac. The “efficient market hypothesis” (EMH) is unscientific, because it cannot be empirically tested, as Eugene Fama himself excused the hypothesis as a “dual hypothesis” (and therefore cannot be tested directly).

    The EMH is an academic justification for deregulation and fraud. The most efficient thing about the financial market is in transferring wealth from ordinary individuals to intermediaries. In the latest example, David Evans in a Bloomberg article stated:

    “According to data filed with the U.S. Securities and Exchange Commission and compiled by Bloomberg, 89 percent of the $11.51 billion of gains in 63 managed-futures funds went to fees, commissions and expenses during the decade from Jan. 1, 2003, to Dec. 31, 2012.”

    http://www.bloomberg.com/news/2013-10-07/how-investors-lose-89-percent-of-gains-from-futures-funds.html

  4. October 9, 2013 at 4:00 am

    The rationale behind deregulation is to reduce reporting costs (aka “red tape”) of regulation, to create “frictionless” markets. But the real costs are the high fees and commission charged stealthily by financial intermediaries.

    The financial market information structure is inherently inefficient, because intermediaries exploit information asymmetry by keeping investors ignorant of their investments. The law allows “black box” insider information as “commercial in confidence” information, while the regulators create the illusion that investors are being protected.

    Long-time believer of the EMH ideology, Greenspan admitted in 2008, “Yes I found a flaw. That is precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well”.

    Awarding Eugene Fama the “Nobel” Prize for economics is like awarding Hitler the Nobel Prize for peace. But nothing would surprise me in these wild and chaotic times. Janet Yellen is about to be named to succeed Bernanke and to carry on his failed policies, with renewed vigor and increased boldness.

  5. Jeff
    October 10, 2013 at 5:54 am

    “Committee knows that neoclassical economics is dead.”

    That’s a Laffer!!!

  6. Newtownian
    October 11, 2013 at 6:47 am

    I love the way they cant even make up their mind what to name the prize??!! And they bribe the Nobel trustees to include their prize on the same web site.

    http://en.wikipedia.org/wiki/Sveriges_Riksbank_Prize#Alternative_names

    12 different names since its inception.

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