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December 9,2021
Austin Kuan
A Beautiful Mind
There was no prize for economics in the Nobel Prize. When the Swedish chemist Alfred Nobel died in 1896, his will revealed that the money he left behind was divided into five categories. There was no prize for economics. However, the Swedish Central Bank added this award 73 years after his death. This increase in awards naturally sparked a lot of debate. After all, this move defied Nobel's will.
However, according to the evolution of the great era, economics has not yet become an independent academic field in the Alfred Nobel era. At the time, all countries in the world could use new technologies derived from physics and chemistry to enrich their countries and strengthen their forces, or they could use biomedical technological breakthroughs to eradicate diseases and improve people's health. The reason Alfred Nobel established the Literature and Peace Prizes has a lot to do with the turbulent 19th century he lived in. Nobel grew up during the heyday of the mid-to-late industrial revolution, when a powerful country required explosives for major engineering construction. This is also the main reason Nobel invented the “diatomite explosive,” and he amassed enormous wealth as a result. However, his inventions were later used in wars, resulting in more casualties, and survivors were also suffering and needed to be consoled, so the Nobel Prizes for Literature and Peace were added.
Economy entails governing the world's affairs and assisting the people. However, the debate in the economic field is not based on Nobel's personal beliefs, nor on the beliefs of the monarchs of the great powers in the nineteenth century. The world then witnessed two world wars in the first half of the twentieth century. Following the war, the United States regained global dominance, and Europe began to rebuild. Between 1945 and 1968, there were no large-scale wars in the world, and the population began to grow significantly. In Europe and the United States, the focus has shifted to growth. How should economic policies be developed, and what kind of economic theory should they be based on? It has grown in importance as a topic that countries want to learn more about. As a result, the Swedish Central Bank decided in 1968 to add a sixth prize to the Nobel Prize, which was first awarded in 1969.
Although economics is not a natural science, it is improbable to be classified as a “humanities” field because an economist explains his concerns and then infers his views or establishes a theory. Statistics and mathematics should be used to persuade academics. If someone says, “Raising the minimum wage for workers will reduce companies' willingness to set up factories in the local area, resulting in fewer job opportunities.” It sounds reasonable, but is such a remark always correct? Economists must seek objective statistical data in order to conduct experiments, but he may need to combine his own or others' theoretical frameworks in order to progress. However, he gradually realized that there were far too many variables. Education level, average resident income, immigrant population, political interference, environmental issues, sanitary conditions, and local people's conditions are all variables that can influence the outcome. Where should the experiment's attention be directed? Is it necessary to revise the theoretical framework? What statistical methods or mathematical inferences should be employed? Which variables should be excluded? All of this causes economists to scratch their heads. Companies can profit by claiming that “raising basic wages will kill entrepreneurs' willingness to set up factories and even move factories to other countries” and directly lobbying government officials. Economists, on the other hand, cannot make such rash claims. Even if the economist's final conclusion is consistent with the enterprise's point of view, his method of inference must be tested by academia. If the process fails the step-by-step inspection, the economist will be labeled “Enterprise Queen” and will lose his academic status. So much has been said about this topic because it is the challenge that the three winners of the 2021 Nobel Economic Prize faced many years ago. Of course, this is also a significant factor in their selection.
David Card, the winner of the 2021 Nobel Prize in Economics, will receive half of the prize for his contribution to empirical labor economics research; he currently works at the University of California, Berkeley. The remaining half of the prize money was split between Joshua Angrist of the Massachusetts Institute of Technology and Quido Imbens of Stanford University. The award was given for “contribution to the methodology of causality analysis,” and the methodology they developed provided David Card with the best tool for studying labor and wage-related issues.
The efforts of the three scholars mentioned above disproved the company's consistent claim that “increasing the minimum wage will reduce employment opportunities.” Companies that want to be competitive must not lobby the government to lower basic wages, but must work in other areas. Furthermore, the three discovered through research that immigrants from a country will not take away job opportunities from the country; rather, they will promote the country's economic growth. While it is true that earlier arrivals may have fewer job opportunities, accepting immigrants is generally beneficial to a country's economic development.
Economists have turned their investigations to the “big self” of labor-management relations with different ethnic groups, and discovered insights that can resolve labor-management antagonisms and tell the world to respect the contribution of immigrants while not viewing disadvantaged laborers and immigrants who demand higher wages as scapegoats during the recession. This can also be used to settle many social disputes. This is the significant contribution that the three Nobel Prizes in Economics in 2021 will make.
Economics is divided into two categories: “general economics” and “individual economics.” The former tends to discuss the economic operation of society or country, whereas the latter tends to discuss the economic choices of smaller groups or individuals. In 2021, the Nobel Economic Prize will be awarded in the field of “general economics,” also known as “big self.” However, “individual economics” is also very interesting and should be discussed. The 2020 Economics Prize, for example, was given to the new discoverers of “auction theory.” How should the auctioneer and the auctioneers in the audience make decisions to achieve the best auction results for them? This should be considered a “personal” matter. However, auctions are a type of economic behavior that must be guided by economic theory and supported by advanced mathematical calculation ability. As a result, it is no surprise that mathematicians frequently win the Nobel Prize in Economics. The most well-known recipient is mathematician John Nash, who was honored in 1994.
Nash received his doctorate from Princeton University in 1950, at the age of 22, and presented a new insight into “game theory” in his doctoral dissertation. This insight served as the foundation for his 1994 award. When you engage in competitive or confrontational behavior with others, this is referred to as game behavior, as in chess or playing cards. How do you defeat your opponents? This is also a topic of economic concern because the competition between enterprises may amplify the individual's competitive behavior. If a company understands game theory, it may be able to outperform its competitors with the fewest resources. From “game theory” to “auction theory,” economic awards actually focus on the field of “little self.”
Nash developed mental illnesses after the age of 31, and his research career was temporarily halted. In 1959 and 1961, he was admitted to the hospital for treatment. He did not recover until he was 42 years old, when he was able to return to academic research. Because his story was so well-known, someone assisted him in writing a biography, which was later adapted into the film “A Beautiful Mind.” What's more, the film went on to win the Academy Award for Best Picture in 2002. There is a section in which Nash was awarded the Nobel Prize in 1994. It is also unusual to see a connection between the Nobel Prize and the Academy Awards.
Whether it is the “big self” or the “little self,” observing the Nobel Prize winners, between their speeches, almost everyone feels a beautiful mind, just as the English title of the movie “A Beautiful Mind” suggests. Of course, we still recommend the three Nobel Prize winners in economics in 2021 at the end of this article. They strive for a more equitable treatment status for disadvantaged workers and immigrants through careful study of public and social affairs. Scholars have the ability to make the world a more beautiful place. This is the most eloquent example.