The Nobel Prize in Economics has been in a free fall to mediocrity for several years. The 2012 awards to Alvin E. Roth and Lloyd Shapley for their work in market design and matching theory essentially completes the process of intellectual disintegration for a Prize that once was highly regarded for high quality contributions to economic sciences. The Prize, quite frankly, is now all but worthless in terms of prestige, though not, even with its 20 per cent reduction in value, in terms of krona. Paul Samuelson, Friedrich von Hayek, Milton Friedman, James M. Buchanan, Ronald Coase, et al are inevitably diminished when midgets replace giants in the Alfred Nobel Hall of Fame.
Following the ludicrous award of the Peace Prize to the European Union last week, Nobel Committees across Scandinavia would do well to close their doors in order to maintain credibility for earlier winners whose work truly honored the standards set by Alfred Nobel.
The contributions of Roth and Shapley represent grunt work that can easily be provided by computer novices. In environments where markets do not – or are not allowed – to function an infinite number of matching solutions vie for attention. Pick your preferred outcome and program the computer to deliver it. Then sit back, hope that the Committee shares your prejudices, and wait for the 3 am call from Sweden!