The Nobel Prize in economics was awarded on Monday to Ben Bernanke, Douglas W. Diamond, and Philip H. Dybvig for their research on banks and financial crises. The committee said that their work in the early 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises.” This invaluable knowledge was put to use during the 2008-09 financial crisis and the recent coronavirus pandemic.
The Royal Swedish Academy of Sciences selects the laureates from a list of applicants recommended by the Economic Sciences Prize Committee. This is done by selecting names submitted by approximately 3,000 professors, past winners, and academy members by invitation. Self-nomination is not permitted.
Each of the laureates – officially known as The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel – receives 10 million Swedish krona ($883,000). In addition to the cash award, each of the winners will be awarded an 18-karat gold medal.
The committee stated that Bernanke was a researcher at the Brookings Institution in Washington, while Diamond taught at the University of Chicago and Dybvig taught at Washington University in St. Louis. The Nobel committee praised their efforts, claiming that they had illustrated “why avoiding banking failures is so significant.”
“I was sound asleep when my phone rang,” Diamond said from Chicago to the announcement news conference in Stockholm. “People always talk about things like this, but I never thought it would happen to me.”
The economics prize was shared between three people last year: David Card, for his work on labor economics; and Joshua D. Angrist and Guido W. Imbens for their contributions to the analysis of causal relationships.
On December 10, Stockholm, Sweden will be the venue for this year’s awards ceremonies, which will celebrate the 100th anniversary of Nobel’s death. The Nobel Prize is a highly regarded accolade that is presented every year to people who have made significant contributions to economics. This year’s laureates are unquestionably deserving of the distinction, and their research will continue to play an essential role in our understanding of the economy for years to come.