2016 Oliver Hart (b. 1948)

Oliver Hart was born in London in 1948 and educated at University College School (an institution whose name suggests that it is confused about its identity). He then studied mathematics at Cambridge before turning to economics at a time when a number of others were doing the same. The transition took place at Warwick University, where Hart spent one year learning basic economics and the second doing a master’s degree. From there he went to Princeton (after some useful lobbying from one of his Warwick professors, John Williamson), where he did a PhD. At Princeton he met his future wife, Rita Goldberg, with whom he later had two sons, Daniel and Benjamin. He also learned at Princeton that mathematical economics was not the only economics field to which mathematics could be applied; there was something called economic theory. Michael Rothschild, who had recently moved from Harvard to be a professor at Princeton, was a crucial influence here. 

While at Princeton, Hart became interested in the idea of a stock market economy and more generally incomplete markets. At some point he realized that standard (constrained) optimality arguments do not apply to incomplete market economies with more than one good or more than two periods. Further exploration led him to construct examples where multiple equilibria can be Pareto ranked; where an ex ante redistribution of wealth can lead to a Pareto improvement; where an equilibrium does not exist; and where adding a market can make everyone worse off. 

Hart’s thesis and resulting paper, published in JET in 1975, were well enough received to land him his first job at Essex University in 1974 and his second job at Cambridge in 1975. It is fair to say, however, that since economic theorists were engaged in other pursuits at the time, e.g., asymmetric information (and, in Europe, disequilibrium theory), the paper disappeared from people’s radar screens for a while. It was “rediscovered” in the mid-80s when general equilibrium theorists started working systematically on incomplete markets. More recently, perhaps because of the financial crisis, macroeconomists have become interested in the kinds of pecuniary externalities that are at the heart of Hart’s paper. 

Although the practical importance of the inefficiencies identified in the 1975 paper can be questioned, the fact that the paper is still being talked about more than forty years after it was written is a pleasant surprise and not something that Hart would have predicted. 

2015 Angus Deaton (b. 1945)

Angus Deaton (Princeton University, UK-born, 1945)

Citation: “For his analysis of consumption, poverty, and welfare.”

Angus Deaton was born in Edinburgh, educated at Hawick High School (at the same time as 2017 chemistry Nobel Laureate Richard Henderson), at Fettes, and at Fitzwilliam College, Cambridge, where he was an Exhibitioner in Mathematics. After a brief and undistinguished career in the Bank of England, he returned to academia, where he has remained. He was a research officer at the Department of Applied Economics in Cambridge, working with Sir Richard Stone on planning for growth. In 1975, he became Professor of Econometrics at the University of Bristol and moved to Princeton as Professor of Economics, Public, and International Affairs in 1983. He became a Senior Scholar and Emeritus Professor in 2016.

He is the author of almost two hundred papers in professional journals, and of six books, including The Great Escape: health, wealth, and the origins of inequality (2013), of Economics in America: an immigrant economist explores the land of inequality, (2023) and, with Anne Case, of Deaths of despair and the future of capitalism (2020), a New York Times best-seller.

His interests include health, happiness, development, poverty, inequality, and how best to collect and interpret evidence for policy. He is a member of the National Academy of Sciences of the USA, of the American Philosophical Society and, in Britain, a Fellow of the British Academy and an Honorary Fellow of the Royal Society of Edinburgh. He is a past President of the American Economic Association. He holds several honorary doctorates from universities in Europe and the US including Cambridge, Edinburgh, and St Andrews. In 2015, he received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for his analysis of consumption, poverty, and welfare.” He was made a Knight Bachelor in 2016.

📅 Timeline of Key Contributions

1970s – Early Work

• 1974 – Consumer Demand in the UK, 1900–1970 → historical demand analysis.

• 1977 – Involuntary Saving Through Inflation → link between inflation & savings.

1980s – Breakthrough

• 1980 – Economics and Consumer Behavior (with John Muellbauer) → Almost Ideal Demand System (AIDS), landmark model of household demand.

• 1989 – Intertemporal Choice and Inequality → how households smooth consumption.

2014 Jean Tirole (b. 1953)

Jean Tirole is one of the most influential economists of our time. He has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms. 

Many industries are dominated by a small number of large firms or a single monopoly. Left unregulated, such markets often produce socially undesirable results – prices higher than those motivated by costs, or unproductive firms that survive by blocking the entry of new and more productive ones. 

From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures. His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies? 

Before Tirole, researchers and policymakers sought general principles for all industries. They advocated simple policy rules, such as capping prices for monopolists and prohibiting cooperation between competitors, while permitting cooperation between firms with different positions in the value chain. Tirole showed theoretically that such rules may work well in certain conditions, but do more harm than good in others. Price caps can provide dominant firms with strong motives to reduce costs – a good thing for society – but may also permit excessive profits – a bad thing for society. Cooperation on price setting within a market is usually harmful, but cooperation regarding patent pools can benefit everyone. The merger of a firm and its supplier may encourage innovation, but may also distort competition. 

The best regulation or competition policy should therefore be carefully adapted to every industry’s specific conditions. In a series of articles and books, Jean Tirole has presented a general framework for designing such policies and applied it to a number of industries, ranging from telecommunications to banking. Drawing on these new insights, governments can better encourage powerful firms to become more productive and, at the same time, prevent them from harming competitors and customers.

2013 Robert J. Shiller (b. 1946)

Robert J. Shiller is Sterling Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University, and Professor of Finance and Fellow at the International Center for Finance, Yale School of Management. He received his B.A. from the University of Michigan in 1967 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1972. He has written on financial markets, financial innovation, behavioral economics, macroeconomics, real estate, statistical methods, and on public attitudes, opinions, and moral judgments regarding markets. 

Professor Shiller was awarded the 2013 Nobel Prize in Economic Sciences, together with Eugene Fama and Lars Peter Hansen of the University of Chicago, "for their empirical analysis of asset prices." 

His 1989 book Market Volatility (MIT Press) is a mathematical and behavioral analysis of price fluctuations in speculative markets. His 1993 book Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks (Oxford University Press) (available via subscribing libraries on Oxford Online) proposes a variety of new risk-management contracts, such as futures contracts in national incomes or securities based on real estate that would permit the management of risks to standards of living. His book Irrational Exuberance(Princeton 2000, Broadway Books 2001, 2nd edition Princeton 2005) is an analysis and explication of speculative bubbles, with special reference to the stock market and real estate. His book The New Financial Order: Risk in the 21st Century (Princeton University Press, 2003) is an analysis of an expanding role of finance, insurance, and public finance in our future. His book Subprime Solution: How the Global Financial Crisis Happened and What to Do about It, published in September 2008 by Princeton University Press, offers an analysis of the housing and economic crisis and a plan of action against it. He co-authored, with George A. Akerlof, Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalismpublished in March 2009 by Princeton University Press. His latest book, Finance and the Good Society, was published in April 2012 by Princeton University Press.

His repeat-sales home price indices, developed originally with Karl E. Case, are now published as the S&P/Case-Shiller Home Price Indices. The Chicago Mercantile Exchange now maintains futures marketsbased on the S&P/Case-Shiller Indices. 

He has been research associate, National Bureau of Economic Research since 1980, and has been co-organizer of NBER workshops: on behavioral finance with Richard Thaler since 1991, and on macroeconomics and individual decision making (behavioral macroeconomics) with George Akerlof since 1994. 

He served as Vice President of the American Economic Association, 2005 and President of the Eastern Economic Association, 2006-07.

2013 Lars Peter Hansen (b. 1952)

Lars Peter Hansen is an internationally known leader in economic dynamics who works at the boundary of economics and statistics. He was recently awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his early research. Hansen shares this honor with Eugene Fama and Robert Shiller.

Hansen’s early research in econometrics was aimed at developing time series statistical methods to investigate one part of an economic model without having to fully specify and estimate all of the model ingredients. The applications he explored with several coauthors included systems that are rich enough to support models of asset valuation and to identify and clarify empirical puzzles, where real-world financial and economic data were at odds with prevailing academic models. Hansen is recognized for making fundamental advances in our understanding of how economic agents cope with changing and risky environments. He has contributed to the development of statistical methods designed to explore the interconnections between macroeconomic indicators and assets in financial markets. These methods are widely used in empirical research in financial economics. 

Hansen’s recent work focuses on uncertainty and its relationship to long run risks in the macro economy. He explores how models that incorporate ambiguities, beliefs, and skepticism of consumers and investors can explain economic and financial data and reveal the long-term consequences of policy options. Hansen and coauthors have recently developed methods for modeling economic decision-making in environments in which uncertainty is hard to quantify. They explore the consequences for models with financial markets and characterize environments in which the beliefs of economic actors are fragile. 

Currently, Hansen is co-principal investigator on a research initiative with the Macro Financial Modeling Group (MFM) that works to develop macroeconomic models with enhanced linkages to financial markets, with the aim of providing better policy tools for monitoring so-called systemic risks to the economy. He is also contributing his expertise on decision-making under uncertainty to a collaborative effort as part of the Center for Robust Decision Making on Climate and Energy Policy (RDCEP) to develop dynamic economic models in which economic activity could influence the climate.