Economists understandably get worked up about the “Nobel” prize in economics (Nobel in quotes because it was instituted in 1968 by the Bank of Sweden “in the memory of Alfred Nobel,” unlike the Nobel prizes in physics, chemistry, medicine, literature and peace.)
In any event, you cannot evade the fact that it confers enormous prestige, and most regrettably it buys unjustified influence among politicians and policymakers, especially in developing nations.
Friedrich A. Hayek (who was awarded the 1976 prize together with Gunnar Mrydal) in his Nobel banquet speech said that “if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.” His first reason why was that it “would tend to accentuate the swings of scientific fashion.”
Intellectual fads and fashions are more common in social sciences than in the hard sciences. The fad that currently rules development studies is poverty and inequality. There’s a deep reservoir of gold in poverty.
Hayek’s second reason for why there should not be a Nobel prize was that it influenced non-economists:
It is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess.
This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.
But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.
Anyway, I have been asked about the recent award (to Banerjee, Duflo and Kremer), particularly regarding their work. I have no interest in their domain and therefore know practically next to nothing about it. I don’t know if they “deserve” the prize. I only know I am disappointed.
The disappointment is not about who got the prize; it is about who didn’t get it. I was hoping against hope that the academy would recognize Israel Kirzner. Read Peter Boettke’s article of March 2017 on why Kirzner deserves the award.
I tweeted my hope and my fear on Oct 11th:
[Click on the image for the context. I misspelled Keynesian in the tweet.]
I don’t believe that Kirzner would have influenced policy directly had he been awarded the prize. His work on the nature of entrepreneurship and its role in the economy is of interest to those who wish to understand how the world works. Politicians and bureaucrats don’t have the slightest interest in that.
Back to the matter of the recent prize. I think it has something to do with randomized controlled trials (RCT.) Here’s Angus Deaton of Princeton University (2015 Nobel). Delightfully instructive lecture in which he talks about RCT:
At the very start Prof Deaton describes the World Bank’s attempts at justifying its attempts at development as “…the most singularly unimpressive bunch of piffle you’ve ever read…”
So let me conclude this with what I fear, the triumph of fashion over substance. Economists are not immune to fashion but neither are they what James Buchanan (one of my favorite economists who added prestige to the econ prize) said that “we have not yet become a bevy of camp following whores.” (Quoted by Deaton in the lecture above.)
 I am not uniformly against prestigious prizes. Sometimes the recipient gets elevated by the prize; sometimes the prize gets elevated by the recipient; and unfortunately sometimes the prize gets diminished by who gets it. The last happens frequently with the Nobel Peace prize.
Giving the “peace” prize to warmongers and those guilty of mass murder is not uncommon. Kissinger, BHO, Teresa are prime instances mockery of the word peace.