Tomorrow, the Nobel Foundation will announce the winner of the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel," which was established in 1969. Wags like to point out that this isn't nearly as impressive as an "actual" Nobel Prize because it wasn't included in Nobel's original list. (Also, at least one of Nobel's descendants thinks the prize is an insult to real scientists.)
This doesn't strike me as a particularly powerful critique. In fact, the intellectual contributions of the winners of the Economics Nobel have held up much better than the contributions of several past winners of the vaunted Peace Prize.
In 2009, the committee awarded the peace prize to President Barack Obama, supposedly because he "inspires hope for a better future." An uncharitable interpretation is that Obama was given a prize simply for not being George W. Bush. Yet in the years since, he has either continued or expanded most of Bush's signature counter-terrorism policies, including drone strikes and military interventions in the Middle East.
Kim Dae Jung, then the president of South Korea, won the peace prize in 2000 for attempting to reconcile with his bellicose northern neighbor. Yet his “sunshine policy” had no lasting legacy besides a handful of alpine tourist resorts and a manufacturing complex in Kaesong.
One of the most infamous prize winners was Yasser Arafat, who shared the prize in 1994 with two of his Israeli counterparts. Just a few years later, his dissatisfaction with the state of peace negotiations at Camp David pushed him to unleash a terrorist campaign against Israel that ended up costing thousands of lives on both sides.
Last but not least is the Nobel Peace Prize that even the Nobel Committee admits is the one most frequently criticized: the joint award to Henry Kissinger and Le Duc Tho for having supposedly negotiated an end to the war in Vietnam. The two men certainly spent a lot of time talking with each other about events in Southeast Asia (I recommend reading Kissinger’s "White House Years" for one interesting perspective), but the peace treaty they produced was mostly worthless. North Vietnamese forces continued to attack South Vietnam, subjugate the people of Laos and support the Khmer Rouge’s violent takeover of Cambodia.
In comparison, the recipients of the Economics Nobel have distinguished themselves. Kissinger and Le Duc Tho produced no lasting peace in Indochina, but Wassily Leontief, who won the economics prize that year, invented input-output analysis. This technique is used to measure the value added (and destroyed) by different economic activities, and has been adapted by Google to rank the relevance of websites.
Likewise, the men who were applauded for making peace between Israel and the Palestinian Arabs turned out to be failures, but the economists honored in 1994 -- John Harsanyi, John Nash and Reinhard Selten -- have made important contributions to our understanding of game theory and negotiations. (Nash, of course, even got played by Russell Crowe in a movie.)
This isn’t to say that economics has been free of embarrassments. In 1997, the award was given to Robert Merton and Myron Scholes for their (valuable) work on options pricing. In an attempt to profit from their theoretical insights, the two men had co-founded extremely profitable Long-Term Capital Management in 1993. It blew up spectacularly just one year after they won the prize because of bad risk management.
(Matthew C. Klein is a writer for Bloomberg View. Follow him on Twitter.)