Nassim Taleb© Shannon Stapleton / Reuters
Nassim Taleb, the brilliant former trader of Black Swan fame, thinks the Nobel prize has made a significant contribution to the perpetuation of the myth that economic models are as much hard science as E=MC[squared]
In an interview with Reuters, Mr. Taleb offered a list of previous prize winners whose work has turned out to be considerably more art than science and which he believes contributed mightily to the worst financial and economic disaster since the Great Depression. They include such illustrious pioneers of modern economic, risk assessment and portfolio theory as Harry Markowitz, William Sharpe, Robert Merton, Myron Scholes, Robert Engle, Franco Modigliani and Merton Miller.
The next prize winner will be revealed to great public acclaim or, more typically, puzzlement on Oct. 11. But what neither Mr. Taleb nor most other people realize is that none of the above actually won a Nobel Prize -- at least not the official one set up in the name of the late dynamite mogul.
What the gaggle of economic theorists have actually scored is the Sveriges Riksbank Prize in Economic Sciences, which is paid for by the Swedish central bank "in memory of Alfred Nobel," who set aside nothing from his vast fortune to honour economists.
It would be like the Bank of Canada handing out an annual award to an economist in the name of the governor-general. Which, come to think of it, could be fun. My vote goes to the philosophy prof who once opined that a social scientist could reach any conclusion based on conditional inputs. "My boy," he said, "with ifs, you could put Paris in a bottle."