A Snarky Note on the Nobel
I have a Mises Daily on deck for Thursday, regarding this year’s Nobel (Memorial) winners in economics. But here, one observation:
People on both the left and right are chuckling to themselves that Republicans held up Obama’s nomination of Peter Diamond to the Federal Reserve, now that Diamond has won a Nobel Prize.
But this chuckling doesn’t hold up at all. The thing that initially made Arnold Kling spit out his coffee was this line from the WSJ: “Republicans have held up Mr. Diamond’s confirmation because he is not an authority on monetary policy.”
So, did Diamond just win a prize for his work on monetary policy? I don’t think so. According to the official press release:
This year’s three Laureates have formulated a theoretical framework for search markets. Peter Diamond has analyzed the foundations of search markets. Dale Mortensen and Christopher Pissarides have expanded the theory and have applied it to the labor market. The Laureates’ models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy.
It’s true, the press release goes on to say:
Search theory has been applied to many other areas in addition to the labor market. This includes, in particular, the housing market. The number of homes for sale varies over time, as does the time it takes for a house to find a buyer and the parties to agree on the price. Search theory has also been used to study questions related to monetary theory, public economics, financial economics, regional economics, and family economics.
But if that makes Diamond qualified for a top Fed post, then he is also qualified to run Child Welfare Services.
Furthermore, if you go look at MIT’s announcement, celebrating Diamond’s award, the word “monetary” isn’t even in there.
Look, I get what Arnold Kling was saying: The Republican politicians who held up Diamond’s nomination wouldn’t know their Kuhn-Tucker conditions from their elbow. But strictly speaking, the fact that Diamond won this award doesn’t double-down on the situation. There is nothing in this award per se that would lead you to believe Peter Diamond is an expert on monetary policy, which was the ostensible objection that the Republicans raised.
Furthermore, if you go read the MIT summary of Diamond’s work–as well as Diamond’s own comments about how we should get out of our current mess–then you may AGREE with the Republicans’ assessment.
The funny thing about the stories in the nontechnical press is that they think these Nobel guys discovered something about the world. Mostly, though, they told stories (in proper mathematical form) about search. What this has to do with the world is to be left to others to determine. Put it this way and suddenly no non-economist is interested!
This award winning work has vast implications. Consider all of the people currently paid to do nothing, ie the majority of public service. And consider all of the people we would like to pay to do less, most notably the president.