Nobel Prize goes to the great Bill Nordhaus -- the founder of modern environmental economics, joint with Paul Romer, who founded the modern innovation-driven approach to understanding economic growth.
Both Bill and Paul have long been tipped to one day win the Nobel. So this will be a popular prize among his fellow economists. The timing of Nordhaus' prize -- coming as the IPCC says that action to warns us that action is necessary -- is perfect.
At one level, this prize doesn't seem like an obvious combination -- both are somewhat related to modern growth theory, but not in any particularly coordinated or similar fashion.
But the Nordhaus-Romer pairing makes sense, because they each point to contradictions at the heart of capitalism. It's all about market failure. Left alone, markets will generate too much pollution (Nordhaus) and too few ideas (Romer).
The common thread is that smart government policies -- that tame, harness and direct economic forces -- are essential if the economy is to deliver good outcomes in the long run. These are important ideas which are used every day in modern policy debates.
Paul and Bill are both Americans, and use the modern formal toolkit. Each has spent their careers starting with abstract economic ideas based on difficult greek letters, and working out their practical implications for policy.
This is, for sure, a Nobel Prize about the big questions. For Nordhaus, it's about asking how can we grow the economy without destroying our planet? And for Romer, it's about asking what's in the engine room that drives economic growth, and how can we keep it going?
In recent years, Paul has been a vocal critic of the state and direction of modern economics. He's done that even while making his mark using the mathematically-sophisticated tools used by those modern theorists he derides. It's not the tools he criticizes, it's their artisans.
Romer is surely the more colorful of the two laureates.
Here's his critique of modern macro: paulromer.net/trouble-with-m…
Here's his side of his falling out with the World Bank: paulromer.net/romer-slaughte…
Here's his critique of modern macro: paulromer.net/trouble-with-m…
Here's his side of his falling out with the World Bank: paulromer.net/romer-slaughte…
Later today I'll show my introductory economics this photo, explain these are our latest Nobel laureates, and then tell my students we'll be studying their big ideas in a couple of lectures time. The lag from research to 101 can (and should be!) that short. #teachecon 
Both Bill and Paul are also superb economic educators. Nordhaus came on as a coauthor of the most important economic textbook ever written (Samuelson's "Economics" because Nordhaus & Samuelson), and Romer founded Aplia, which was the first big shove moving econ education online.
Oh, as you would expect from a student of technological change, Paul Romer is on Twitter, which means you can congratulate him @paulmromer. (Congrats, Paul.)
You really must read Nordhaus' case study of the falling price of light. It's that extraordinary piece that focuses on one small part of the economy, and makes you wonder if you've misunderstood the broader machine. @TimHarford's summary is delightful: bbc.com/news/business-…
And I hadn't realized (or had forgotten) that Nordhaus begat @paulkrugman
(Romer has his own Nobel lineage, as he was a student of Lucas, the 1995 laureate.)
(Romer has his own Nobel lineage, as he was a student of Lucas, the 1995 laureate.)
It's a helluva compliment when a great economist says she was inspired to pursue economics because of an extraordinary Econ 101 prof. #teachecon
Looks like Bill Nordhaus might be an Econ Twitter lurker. So you can congratulate @NordhausYale directly, especially now that he's let loose with that valuable first tweet.
A lovely detail that speaks to the man's modestyand humanity:
What did Bill Nordhaus do after learning he won the Nobel? Went to class to teach intermediate macro. news.yale.edu/2018/10/08/che…
