Nobel Prize in Economics Awarded
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Filed at 3:24 p.m. EDT
By The Associated Press
STOCKHOLM, Sweden (AP) -- Amartya Sen, a scholar from India whose work produced a new
understanding of the catastrophes that plague society's poorest people, won the Nobel Economics
Prize today.
Sen (whose first name is pronounced Ah-MAR-tya) was awarded the prestigious prize for his
contributions to welfare economics, which help explain the economic mechanisms underlying famines
and poverty, the Royal Swedish Academy of Sciences said.
''I was surprised and quite pleased when I got the call,'' Sen, 64, said in New York. ''But I was
even more pleased when they told me the subject matter was welfare economics, a field I have long
been very involved in. I am pleased that they gave recognition to that subject.''
Sen ''has restored an ethical dimension to the discussion of vital economic problems,'' the Nobel
citation said.
The 64-year-old economist joined Britain's Trinity College in Cambridge this year after teaching at
Harvard University, among other institutions. He has studied the Bangladesh famine of 1974 and
other catastrophes in India, Bangladesh and the countries of the Sahara.
The award comes just a month after the image of last year's winners, Americans Robert Merton and
Myron Scholes, was tarnished by the near-collapse of a giant hedge fund in which they were
partners. Merton and Scholes were honored for their work on valuing risky ''derivatives''
investments such as stock options.
Sen works in development economics, the study of the welfare of the world's poorest people. His
best-known work, detailed in his 1981 book ''Poverty and Famines: An Essay on Entitlement and
Deprivation,'' challenges the common view that the shortage of food is the most important
explanation of famine.
Sen downplayed his Nobel achievement, saying there were many others who deserved the prize and
he wished he could share it with them. Sen was in New York to attend a memorial service Thursday
for Mahbub ul Haq, a former finance minister of Pakistan.
Looking at several catastrophes, Sen has shown that ''famines have occurred even when the supply
of food was not significantly lower than during previous years'' without famines, the citation said.
Part of his explanation of the 1974 Bangladesh famine is that flooding throughout the country
significantly raised food prices, while work opportunities for agricultural workers declined. Due to
these factors, the real incomes of agricultural workers declined so much that they were
disproportionately stricken by starvation.
His work undertakes hard economic analysis and broader questions about the best ways to
determine whether poverty is increasing or decreasing.
''Sen's research has practical use in every collective decision-making process,'' said Robert
Eriksson, professor of sociology at the University of Stockholm. ''He cares about the poorest in
society.''
Rakesh Mohan, director-general of India's National Council for Applied Economic Research,
praised Sen as ''an unusual economist who has combined deep concern for human development
with the very fine work in technical economics.''
Sen's award highlights an underappreciated area of study, said Scott Brown, chief economist at
Raymond James & Associates, an investment firm in St. Petersburg, Fla.
''Developmental economics has never really gotten a whole lot of attention in the academic world,
and certainly the magnitude of the problem and type of issues it deals with is obviously very
significant,'' Brown said.
The prize was worth about $963,000 at today's exchange rate.
It is the second year in a row that the prize has gone to work with a clear connection to day-to-day
lives, rather than to highly theoretical work.
Long-Term Capital Management, the fund in which Merton and Scholes were partners, needed a
$3.6 billion bailout from banks after nearly failing. But despite the tarnish on their reputations,
Merton's and Scholes' award-winning theories were not faulty, said Torsten Persson, a professor at
the Stockholm School of Economics.
''They lost money, but this has nothing to do with the prize,'' Persson said.
This honor is the only Nobel not established in the will of Swedish industrialist Alfred Nobel, who
invented dynamite. It was created in 1968 to mark the tercentenary of Sweden's central bank.
On Tuesday, Robert B. Laughlin of Stanford University, Horst L. Stormer of Columbia University
and Daniel C. Tsui of Princeton University won the Nobel physics prize for discovering how
electrons can change behavior and act more like fluid than particles.
The chemistry prize went to Walter Kohn of the University of California at Santa Barbara and John
A. Pople of Northwestern University for developing ways of analyzing molecules in chemical
reactions.
On Monday, the medicine prize was given to three Americans -- Robert Furchgott, Louis Ignarro
and Ferid Murad -- for their work on discovering properties of nitric oxide, a common air pollutant
but also a life-saver because of its capacity to dilate blood vessels.
The literature prize was awarded last week to Portuguese novelist Jose Saramago.
The peace prize, the last in this year's series, is to be announced Friday.
The prizes are presented on Dec. 10, the anniversary of the death of Nobel. |
