In Nobel prizes, economics and fashion don't mix

By Adam Cox

STOCKHOLM (Reuters) - House prices, churning markets and global imbalances may be today's burning issues, but don't bet on any of these figuring in the next Nobel economics prize.

Or then again, maybe all three will.

For a field about forecasting, economics has proved ironically to be one of the toughest awards to call -- partly because Nobel panelists historically have veered away from the fashionable economic ideas of the day.

"It is wonderfully hard to predict," said Tim Harford, a columnist and author of "The Underground Economist".

Panel members often want to know if a theory works and they are willing to wait years, or decades, to find out.

"The nature of a social science is that it's very hard to say, 'We found this thing and we know it's true and it's going to turn the world upside down'," Harford said. "We really have to see whether an idea proves to be widely adopted and useful."

The "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" is due to be announced in Stockholm on Monday.

A late addition to the Nobel prize family, economics became a category in 1968, well after awards for peace, literature and sciences began in 1901 as per the will of the dynamite tycoon.

Harford said many Nobels through the years have gone to older economists as the prize cannot be awarded posthumously and the committee wanted to recognize key figures before they died.

Swedish banking group Swedbank, which publishes an annual list of its best guesses, said the committee is most likely to favor innovative work that is 15 to 25 years old.

"Relatively young -- though successful -- research thus has very slim chances of being awarded," the bank said.

NEW PARADIGM

Joseph Stiglitz, a co-winner of the 2001 award, is someone who knows first-hand about the slow acceptance of ideas.

Upon receiving the prize, for his work with George Akerlof and Michael Spence on markets with asymmetric information, Stiglitz said he wanted to show that "information economics" represented a new theoretical framework.

"A very large fraction of work in economics today is conducted within this new paradigm," Stiglitz told Reuters in a telephone interview.