They won this year’s Nobel for economics. Here’s why their work matters

William Nordhaus

Professor William D. Nordhaus of Yale university was awarded with the Nobel Prize 2018 in Economics (Yale, 2018).

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author:  Simon Brandon, Freelance journalist

On the day that the UN Intergovernmental Panel on Climate Change (IPCC) warned that we only have 12 years left in which to prevent climate catastrophe, an American climate economist cited heavily in the IPCC’s report has been named one of the two winners of this year’s Nobel Memorial Prize for Economic Sciences.

William Nordhaus, a professor of economics at Yale, has been recognized by the Royal Swedish Academy of Sciences for his work – dating back to the 1970s – in understanding and modelling how the global economy and the climate interact.

Nordhaus shares the $1 million Nobel prize with Paul Romer – a professor at New York University’s Stern School of Business – who has won for his work demonstrating the fundamental importance of internal factors, such as technological innovation, in driving a nation’s economic growth.

Together, the Nobel Committee says, the two laureates have “designed methods that address some of our time’s most fundamental and pressing issues: long-term sustainable growth in the global economy and the welfare of the global population”.

Nordhaus began his work on climate change in the 1970s, when the evidence of manmade global warming had begun to emerge. He developed a set of simple but dynamic models of the relationship between the global economy and climate. These tools – called ‘integrated assessment models’ – enable us to simulate the consequences for both economy and climate of the decisions, assumptions and policies made and enacted today.

Nordhaus’ work has led him to conclude that the best way to reduce greenhouse gas emissions and mitigate their effects is a globally enforced system of carbon taxes – a course of action is recommended in the IPCC’s report.

 How four carbon tax policies will affect future CO2 emissions, according to William Nordhaus' models

How four carbon tax policies will affect future CO2 emissions, according to William Nordhaus’ models
Image: The Royal Swedish Academy of Sciences

Romer’s work, meanwhile, has led him to develop a set of ideas called endogenous growth theory. Traditionally, economists have held that a nation’s economic growth is driven largely by external factors – outside investment, for example. But Romer’s theory holds that the opposite is true; that it is internal – or endogenous – factors that hold the key to a country’s prosperity. This is important because it demonstrates to governments and policymakers that sustainable growth is achievable by directing resources and investment internally towards drivers of technological innovation, such as education and research.

While Nordhaus’ work is the most overtly concerned with combatting climate change, Romer’s is also key, because we need technological innovation on our side in the fight against climate change. Asked to name the most important lesson from his during the interview with the Nobel Prize Committee included above, Romer answered: “What happens with technology is within our control.”

“If we collectively set our minds to improving technology,” he says, “we can improve it in a direction that seems to be important to us and at a faster rate… Instead of treating it like the weather, we can treat [technology] as something that we control.”

The contributions of these two economists are “crucial steps forward in addressing central questions about the future of humanity,” the Nobel Committee has said. To move towards a system of sustainable global economic growth, we need to understand the best direction of travel. Romer and Nordhaus have helped to point the way – and their road signs could not be any timelier.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

What’s the latest on coronavirus antibody tests?

Remembering Kofi Annan

Female leaders warn about the erosion of women’s rights

Yemen: Escalation in fighting must stop ‘before it’s too late’, Griffiths tells Security Council

Romania: MEPs are deeply concerned about judicial independence and rule of law

Zuckerberg, a paella, and the mighty EU questionnaires that would stop Whatsapp acquisition by Facebook?

UN cultural agency removes birthplace of Jesus from its list of heritage sites in danger

How the massive plan to deliver the COVID-19 vaccine could make history – and leverage blockchain like never before

EU tourism industry expects a new record year in 2014

Youth leaders share positive visions of the future, as Guterres launches UN75 in New York

Apple Vs. EU: Will the US tech giant ever pay for taking advantage of Ireland’s taxation?

COVID-19 lessons learned: stronger role for EU medicines regulator

Mergers: Commission prohibits Siemens’ proposed acquisition of Alstom

A Sting Exclusive: “There can be no global deal on emissions without China and the USA”, Conservative MEP Ian Duncan stresses from Brussels

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

This is the state of the world’s health, in numbers

Peru is building a new international airport near Machu Picchu – and archaeologists are worried

The new ethical dilemmas in medicine of the 21st century

Commission extends transparency and authorisation mechanism for exports of COVID-19 vaccines

Is the world living up to its climate commitments?

A Sting Exclusive: “Asia-Pacific response to COVID-19 and climate emergency must build a resilient and sustainable future”, by the United Nations Under-Secretary-General

Fed, ECB take positions to face the next global financial crisis; the Brits uncovered

The gender gap in medicine: why must it be closed?

Trump: Hostile to Europe, voids Tillerson’s “ironclad” ally pledge

Eurozone in trouble after Nicosia’s ‘no’

The future of energy is being shaped in Asia

Vaccine against Ebola: Commission grants first-ever market authorisation

Five ways individuals can help save the oceans

Why remote working doesn’t have to mean alienated employees

3 principles to reinforce digital trust in supply chains

Food safety critical to development and ending poverty: FAO deputy chief

Commission welcomes political support by Member States to improve the protection of bees

UN panel to rally global political will to tackle internal displacement crisis

Deal on digitalisation of access to justice will benefit citizens

How the digital finance revolution can drive sustainable development

Commission Vice-President Rehn exaggerates Eurozone’s growth prospects

This NASA-inspired technology converts carbon dioxide into food. Here’s how

How cities, not states, can solve the world’s biggest problems

How to stop plastic pollution at source

Working fewer hours makes you more efficient. Here’s the proof

Mexico cannot move forward ‘without addressing the shadows of the past’, says UN rights chief

Rule of law: MEPs travel to Malta to meet with government, NGOs and journalists

Tsipras imposes more austerity on insolvent Greece; plans to win new early election soon

Coronavirus: here’s what you need to know about face masks

A critical European young voice on Net Neutrality: the distance between Brussels and Washington

How to build public trust in a sustainable energy future

Syria: Urgent, concrete actions needed, to protect children too young to ‘make sense of this senseless war’

Universal Health Coverage in the EU: Are we really leaving no one behind?

This Japanese experiment shows how easily coronavirus can spread – and what you can do about it

This start-up is recycling abandoned wooden homes in Baltimore

Conflict prevention, mediation: among ‘most important tools’ to reduce human suffering, Guterres tells Security Council

A European student just sets the question of the day: What kind of education policies are missing in Europe?

MEPs approve new CO2 emissions limits for trucks

Combat against devastating effects of tobacco can only be won ‘if the UN stands united’ – UN health official

State aid: Commission approves €2.5 billion Italian scheme to support self-employed and healthcare professionals in context of coronavirus outbreak

Sudan Prime Minister survives attempted assassination

Yemen war: UN-backed talks to silence the guns due to begin in Stockholm

As Libya talks resume in Geneva, UN negotiator seeks to overcome sticking points

The health of the human being in coexistence with a transformative biosphere

This disability activist says we must offer dignity and financial inclusion rather than just braille and ramps

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s