An Overview of the Nobel Prize for Economics in 2018

When students take up the study of Economics under a good tutor like JC Economics Anthony Fok, the usual areas of study are macroeconomics or microeconomics. But if you look at the Nobel Prize winners for 2018, you will be surprised to note that a seemingly unrelated area was looked into by the winners.

The 2018 winners for Economics were William Nordhaus of Yale University and Paul Romer of New York University’s Stern School of Business. They won the Nobel Prize jointly for integrating technological innovations into long-run macroeconomic analysis. Their work which won them this recognition was part of their efforts to create avenues for sustainable economic growth.

Any good Economics tutor Singapore will tell you that the study of economics deals with the efficient utilization of scarce resources in order to optimize the balance between demand and supply. But the reason Nordhaus and Romer were awarded the Nobel was because they also looked into the interactions of nature and knowledge in economic theory.

Over the years, economists have deliberated how technology affects economic growth. But Romer looked at this from the other way round, and deliberated on how economics and market forces can determine the creation of new technologies. This was referred to as endogenous growth theory. The other winner, Nordhaus, looked at the interplay of nature and society. As far back as the 1990s saw him create a robust model for this, which he called the integrated assessment model. It tried to describe the pulls and pushes of global climate and the global economy. The impressive thing about this model was that it spoke not only about economics and nature but also incorporated elements of physics and chemistry as well. Scholars, policymakers and even the general public have looked at these efforts of Romer and Nordhaus to understand the impact of climate policy on economic activities.

For students taking up Econs tuition Bukit Timah, the 2018 Nobel Prize winning work in Economics was of special interest because it broke away from the usual areas of study and research and delved into an area which is not usually associated with economists. This was a great way to encourage young students that Economics is not just a dry subject dealing with arcane models and complicated graphs. It drove home the point that Economics is a subject that can be explain several occurrences of our humdrum life, and also used to predict future lives.