Faculty define a business school. Their research, teaching, mentorship, and influence have tremendous impact on the experience students have while there and often the careers they pursue once they graduate. From the curriculum they shape to the initiatives and centers they help run, faculty are vital. And it certainly never hurts when those faculty are also Nobel Prize winners.
This year, professors at two leading business schools were recognized with the 2018 Nobel Prize in Economic Sciences: Paul Romer at NYU Stern School of Business and William Nordhaus of Yale School of Management (SOM).
Nobel Prize in Economics
At first glance, Romer and Nordhaus might seem unrelated. Romer has spent his career focusing on the nature of economic growth, seeking to answer the burning question, “Why do economies grow and how?” Nordhaus’ work, on the other hand, dives deep into the economic costs of environmental damage in an effort to gauge how much society would be willing to pay to avert climate change.
And yet both men have been hailed by Sveriges Riksbank, which awards the economics prize, as individuals known for “integrating innovation and climate with economic growth,” the Economist reports. They have also both influenced the way other economists think about critically important and complex systems.
Paul Romer joined NYU Stern in 2010. Currently on leave, Romer is best known for founding the NYU Stern Urbanization Project in 2011, which conducts applied research on how policymakers in the developing world can use city growth to create economic opportunity and enact social reform.
Romer also directed NYU’s Marron Institute of Urban Management, focused on improving how we understand cities. The goal is to work with civic innovators to make cities safer, healthier, more mobile, and more inclusive.
In economics, Romer is known for developing the “endogenous growth model” and other approaches for spurring the market to generate new ideas. These models are based on the belief that the pace of growth and ways in which ideas are translated into growth depends on factors such as state support for research and development of intellectual-property protections. Hailed as a critical step toward understanding patterns of economic growth across the globe, his models highlight that the creation and spread of ideas is necessary for growth, but not alone adequate for initiating it.
In awarding Romer with the Nobel Price in Economics Sciences, the Swedish Academy cited his influence on “integrating technological innovations into long-run macroeconomic analysis.” (NYU Stern News)
Yale SOM Professor William Nordhaus has significantly impacted the teaching of economics at the school. A few years ago, he chaired the Yale Carbon Task Force, which looked at the market price of carbon-related products to determine the need for a market correction due to over-consumption or potential externalities. In particular, the task force delved into questions about distributing costs through organizations, tax effects of corrections, and connectivity problems and solutions.
As a professor, Nordhaus is best known for connecting people with important issues. He asks tough questions that make economics more accessible for everyday people and policymakers.
In economics specifically, he is best known for tackling complex systems surrounding climate change. His research has examined the economic costs of environmental damage and how much society would be willing to pay to avert them. As part of his work, he has combined mathematical descriptions of emissions with integrated assessment models, allowing him to project the impact of different global carbon emissions trajectories on global temperatures.
In awarding him the Nobel Prize in Economics, the Swedish Academy praised his work for “integrating climate change into long-run macroeconomic analysis.” (Yale SOM News)
Changing the Face of Economics
In the end, there’s no denying that both Romer and Nordhaus have blazed new trails in economics and humanity. Their names are synonymous with grappling with global issues we can’t afford not to understand.