by Robert Litan
Because the economics Nobel came much later than the prize for the other fields, there was a long pipeline of potential winners waiting to be anointed when Sweden’s central bank established the prize. In the intervening 45-plus years, that pipeline has been mostly exhausted, and along the way, most of the profession’s leading lights who were still living at the time the award was announced have been honored. You learned about a number of the winners in different chapters of this book.1
Two other prizes are given to a particular age-group of economists, those under the age of 40. Of the two, the Clark Medal carries the most prestige and is the oldest. Established in 1947 in memory and honor of John Bates Clark, one of the founders of the American Economic Association, the medal (which carries no money with it, like the next prize to be described) is given to an American economist (one either born here or working here at the time) who is judged to have made a “significant contribution to economic thought and knowledge.” Until 2009, the medal was awarded by the AEA every other year, but since then a Clark winner has been named every year.
The Clark Medal is not only highly sought for its own sake, but because economists often make their research or theoretical breakthroughs when they are younger, winning the Clark is a good predictor of later winning the Nobel.
The Kauffman Medal is also given every year to an economist under the age of 40. The Ewing Marion Kauffman Foundation established it in 2004 to recognize research breakthroughs specifically related to entrepreneurship and its importance to economies. I had a little something to do with the creation of the Medal, since it happened during the time I was vice president of the Kauffman Foundation, the world’s largest foundation devoted to advancing the understanding and promotion of entrepreneurship. Full credit for the idea goes to the Foundation’s president at the time, Carl Schramm, and to one of foundation’s directors who worked with me, Robert Strom, who both thought it up as a way to give economists greater incentives to study entrepreneurship. Like the Nobel, when it was created, there was a backlog of prominent researchers who have since been awarded the prize.
Note
1. For more details about the lives of the Nobel winners in economics, see William Breit and Barry T. Hirsch, eds., Lives of the Laureates, 5th ed. (Boston: MIT Press, 2009). I draw on this source in this book where I discuss some of the Nobel winners and their ideas.
About the Author
As an economist and attorney, Robert Litan has nearly four decades of experience in the worlds of the law, economic research and policy, economic consulting, and as an executive in the private, public, and government sectors. Through his extensive publications and many speeches and testimony, he is a widely recognized national expert in regulation, antitrust, and finance, among other economic policy subjects.
Litan has directed economic research at nationally prominent organizations: The Brookings Institution (where he also was a resident research scholar for nearly two decades); the Kauffman Foundation (the world’s leading foundation supporting entrepreneurship); and Bloomberg Government (the subsidiary of Bloomberg LP that provides analysis of federal government decisions that affect business).
Litan has served in several high-level federal government positions: as principal deputy assistant attorney general in the Antitrust Division of the Justice Department, as associate director of the Office of Management and Budget, and as a consultant to the Department of Treasury on financial modernization and the effectiveness of the Community Reinvestment Act (coauthoring several reports on these subjects). In the early 1990s he served as a member of the Presidential–Congressional Commission on the Causes of the Savings and Loan Crisis. He began his career as a staff economist at the President’s Council of Economic Advisers.
Litan currently is a nonresident senior fellow at the Brookings Institution and of counsel to Korein Tillery, a law firm specializing in complex commercial litigation based in St. Louis and Chicago. He also blogs regularly for the Wall Street Journal’s “Think Tank” page.
During his research career, Litan has authored or coauthored 27 books and edited another 14, and authored or coauthored more than 200 articles in professional and popular publications. His latest books include Better Capitalism, coauthored with Carl Schramm, published by Yale University Press in 2012, and Good Capitalism, Bad Capitalism (coauthored with William Baumol and Carl Schramm), also published by Yale in 2007, which is used widely in college courses and has been translated into 10 languages.
Litan earned his BS in Economics at the Wharton School of Finance at the University of Pennsylvania; his JD at Yale Law School; and his M. Phil. and PhD in Economics at Yale University.
Index
Aaron, Henry
A/B testing
Accelerated automatic securities trading
Accountable Care Organizations
Adams, Scott
Adelman, Jeffrey
Advertising, Google and auctions for online ads
Affordable Care Act (2010)
After the Music Stopped (Blinder)
AfterCollege
AIG
Airlines: auctions for seats on
deregulation of and Ramsey pricing
inefficiencies of regulation
impacts of deregulation of
origins of regulation of
performance optimization and
Algorithmic trading
Alpha, in investing
Amazon
American Stock Exchange
Applied Prediction Technologies (APT)
Arbitrage
Ariely, Dan
Arrow, Kenneth
Asimov, Isaac
AT&T: benefits of breakup
equipment issues and “network integrity”
mobile telephony and
natural monopoly of local and long-distance telephone service
natural monopoly of, technological advances and breakup of
spectrum allocation and
Athey, Susan
Auctions airline seats and
conditional offer of purchase and Priceline
electromagnetic spectrum and
Google and online advertising
market design and
other uses of
Average costs
Average Is Over (Cowen)
Averch, Harvey
Averch–Johnson effect
Ayres, Ian
Bailey, Elizabeth profile of
Baily, Martin
Bair, Sheila
Baker, Donald
Baker, James
Baldridge, Malcolm
Ballmer, Steve
Banerjee, Abhibit
Banking system. See Financial crisis of 2007–2008
Barnett, Rob
Baseball, sports analytics and
Basel Committee on Banking Supervision standards
Battier, Shane
Baumer, Benjamin
Baumol, William profile of
Baumol’s disease
Baxter, William
Beane, Billy
Becker, Gary
Behavioral economics
Behavioral finance
Bell Labs
Benston, George
Bentham, Jeremy
Bernanke, Ben
Besley, Timothy
Better Living through Economics (Siegfried, ed.)
Bhidé, Amar
Bid to ask spreads, NASDAQ and
Big Data future of economics and
Big Short, The (Lewis)
Bitcoin
Black, Fischer
Black-Scholes options pricing formula
Black-Scholes-Merton (BSM) options pricing formula
Blinder, Alan profile of
Bloomberg, Michael
Bloomberg LP
Bloomberg News
Bloomberg Sports
Bloomberg terminals
Blue Chip Economic Indicators
Bogle, John
Booth, David profile of
Bounded rational
ity
Bradford, David
Bradley, Bill
Breyer, Stephen
Brin, Sergey
Broadband communications. See also Telecommunications
Brodsky, Norm
Broker markets
Brown, Scott
Brown–Vitter bill
Brunner, Karl
Bryant, Kobe
Brynjolfsson, Erik
Bubbles, in stock market
Buchanan, James
Buffett, Warren
Bull by the Horns (Bair)
Burlingham, Bo
Burman, Len
Burns, Arthur
Bush (George W.) administration
Business, and applications of economic ideas congestion pricing
field experiments
future and
GDP-linked securities
laboratory experiments
prediction markets
protection against fall in home price
research-backed securities
virtual currency
wage insurance
Calls and puts
Cambridge Research Associates (CRA)
Cannon, Howard
Cap and trade systems
Capital in the 21st Century (Piketty)
Capital One
Capitalism and Freedom (Friedman)
Capital-to-asset ratios, for banks
Carbon taxes
Carnegie, Andrew
Carroll, Robert
Carter administration
Case, Carl
Case, Scott
Case–Shiller index of residential real estate prices
Causation and correlation, economic forecasting and distinguishing between
Caves, Richard
Cellular phones. See Mobile telephony
Centralization, market design and
Chamberlin, Edward
Charles Schwab Corp.
Chetty, Raj
Chicago Board Options Exchange (CBOE)
Choice anxiety
Christie, William
Citigroup
Civil Aeronautics Board (CAB), transportation regulation and
Clark, John Bates
Clark Medal
Clearinghouse function, of credit default swaps
Clearwire
Climate change. See Carbon taxes
Clinton administration
Coase, Ronald profile of
Coase theorem
“College Admissions and the Stability of Marriage” (Shapley and Gale)
Commodities Futures Trading Commission (CFTC)
Comparative advantage, principle of
Competition: deregulation and
regulation as shield from
Computer chips. See Semiconductor industry
Conditional offer of purchase
Congestion, market failure and market design
Congestion pricing
Congressional Budget Office (CBO)
Constraints, on performance
Consumption, proposed tax on
Corning Glass
Cost–benefit analysis, of regulations
Costs, minimizing of learning by doing and
optimization for performance
Council of Economic Advisers (CEA)
Cowen, Tyler
Credit default swaps (CDSs)
Critical path method (CPM)
Cupid.com
Dantzig, George profile of
Dark pools
Data mining, negative and positive connotations of
Data Resources Inc. (DRI)
Dating market, matchmaking in
Dealer markets
Debt, importance of using productively. See also Federal budget deficit
Decentralization, market design and
Dell, Michael
Demand curve analysis, price sensitivity and
Demsetz, Harold
Deregulation economists’ roles in
impacts on new business platforms
impacts on prices
public choice theory
public interest theory
rationales for (see also Energy; Financial policy; Telecommunications; Transportation)
Derivative financial instruments options contracts
Diet problem, performance optimization and
Dimensional Advisors
Directional drilling, natural gas revolution and
Director, Aaron
Director, Rose. See Friedman, Rose Director
Diversification. See Investing, financial engineering and
Diversity constraint, on performance optimization
Dodd, David
Dodd–Frank Wall Street Reform and Consumer Protection Act (2010)
Domenici, Pete
Dorfman, Robert
Douglas, George
Downs, Anthony
Duflo, Esther
Dutch auction
eBay
Eckstein, Otto
Econometric forecasting
Economic consulting industry
Economic growth: benefits to all economic levels
energy revolution and
entrepreneurship and
innovation and
labor force and productivity and
Economic Theory of Democracy (Downs)
Economics: Big Data and technology changes
drivers of change in
field experiments in
future of
laboratory experiments in
prizes in (see also Economists)
Economics, introduction to equity-efficiency trade off and
growth rate of economy and
growth rate of economy and innovation
macroeconomics and microeconomics
market failures
markets
rationality
Economies of scale
Economists: hypothesis verification and
innovation and
positive contributions of
predictions and
role in deregulation
Education, income inequality and
Efficient markets hypothesis (EMH) behavioral finance and
eHarmony
Ehrlich, Paul
Einav, Lirav
Eisenbeis, Robert
Electromagnetic spectrum auctions of
mobile telephony and
scarcity and licensing of
Electronic communications networks (ECNs)
Energy, deregulation of new energy recovery techniques and supply revolution
origins and effects of regulation of natural gas
origins and effects of regulation of oil
wide-spread economic benefits of increased supplies
Entitlement programs. See Public policy entries
Entrepreneurship, as driver of economic growth
Environmental Protection Agency
Epstein, Joshua
Equity, Ramsey pricing and
Equity-efficiency trade off
Ewing Marion Kauffman Foundation. See Kauffman Foundation
Excessive leverage
Exchange-traded funds (ETFs)
Exit, Voice, and Loyalty (Hirschman)
Experiments and experimentation field experiments, generally
field experiments, in business
field experiments, in economics
innovation and entrepreneurs as foundation of economic growth
laboratory experiments, generally
laboratory experiments, in business
laboratory experiments, in economics
Externalities, market failure and
Facebook
Fairbank, Rich
Fama, Eugene profile of
Fannie Mae
Featherstone, Clayton
Federal budget deficit: as driver of policy change
economic growth and (see also Public policy, applications of economic ideas)
Federal Communications Commission (FCC): AT&T and
/> broadband speeds and
electromagnetic spectrum auctions
MCI and
mobile telephony and
Federal deposit insurance
Federal Energy Regulatory Commission (FERC)
Federal Express
Federal Open Market Committee
Federal Power Commission (FPC)
Federal Tax Policy (Pechman)
Fee-for-service health-care payment systems, alternatives to
Ferguson, Niall
Fiber optic cable
Field experiments in business
in economics
Financial crisis of 2007–2008 change in economics profession and
credit default swaps and
deregulation and
excessive leverage and
Glass-Steagall debate
guide to background of
macroeconomics and
rescue of banks and
subprime mortgage lending and
unemployment rate and
Financial engineering. See Investing, financial engineering and
Financial policy, economic ideas and accelerated automatic trading and
competition in brokerage commissions and (see also Financial crisis of 2007–2008)
Financial Stability Oversight Committee (FSOC)
First mover’s advantage
Fiscal policy: defined
economic forecasts and (see also Financial policy, economic ideas and)