Published: Wed, October 10, 2018
Worldwide | By Myra Stephens

Economists Who Changed Thinking on Climate Change Win Nobel Prize

Economists Who Changed Thinking on Climate Change Win Nobel Prize

Yale University President Peter Salove said, "This is fitting recognition of William Nordhaus' work on the economics of climate change". I think it's really anomalous, in the United States, this degree of hostility to environmental policy and climate change policy.

Paul Romer was awarded the the 2018 Nobel Memorial Prize in Economics Sciences. "Humans are capable of awesome accomplishments if we set our minds to it". Nordhaus is a Sterling Professor of Economics at Yale University. His economic approaches to global warming include modeling to determine the efficient path for coping with climate change.

The awarding of half of the prize to Nordhaus could not have come at a more appropriate time, as his work was instrumental in our understanding of how climate change would affect us in the years and decades to come.

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.

The notion of taxing polluters rather than imposing government edicts to cut emissions is based on the premise it would prompt companies to devise new ways of curbing pollution.

Romer said at the press conference that he thought Nobel Prizes would be announced next Monday, so when he received two calls early in the morning, he didn't answer them because he often receives spam calls - he then realized that the calls were from Sweden and he had won the Nobel Prize.

Romer teaches at NYU Stern and founded the Stern Urbanization Project.

Romer's career has taken him outside the academic world.

"The second is how do we deal with the negative effects of economic growth, which have to do with the emission of greenhouse gases leading to a warmer climate - which not just hurts the economy, but risks the life of everyone on earth", Stromberg said.

Governments have the power to promote or discourage innovation through policy. Romer created a more accurate model showing that when the money and resources put into generating ideas increases, the number of ideas does too, which in turn spurs the rest of the economy. If we all produce more ideas, we all benefit from these new ideas, not just the people who produce them. In a 2015 appreciation of Romer, Stanford University economist Charles Jones wrote, "Ideas are not depleted by use, and it is technologically feasible for any number of people to use an idea simultaneously once it has been invented".

The Sveriges Riksbank Prize in Economic Sciences, as it is formally known, was created in memory of Alfred Nobel in 1968.

Last year's prize went to one of the founders of behavioral economics and finance, Richard H. Thaler of Chicago University, for his work studying human bias at a time when other economists still viewed people as rational actors.

The peace prize was awarded Friday to Denis Mukwege of Congo and Iraqi Nadia Murad for their work to draw attention to how sexual violence is used as a weapon of war.

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