Northwestern Nemmers Prize Recipient Wins Nobel Prize
French economist Jean Tirole recognized for work on markets and regulation of business
EVANSTON, Ill. --- After receiving one of the world’s most prestigious economics prizes from Northwestern University in February, French economist Jean Tirole won the Nobel Memorial Prize in Economic Sciences on Monday (Oct. 13).
Seven out of the past 11 winners of Northwestern’s Erwin Plein Nemmers Prize in Economics have gone on to win a Nobel Prize. Awarded biennially from Northwestern, the Nemmers Prize in economics carries a $200,000 stipend and is among the largest monetary awards in the United States for outstanding achievements in economics.
In connection with the Nemmers Prize, Tirole, chairman of the Foundation Jean-Jacques Laffont/Toulouse School of Economics, will deliver a public lecture and participate in other scholarly activities at Northwestern during this academic year.
Also the scientific director of the Institute for Industrial Economics, University of Toulouse Capitole in France, and one of the world’s most influential economists, Tirole won the Nobel Prize for his analysis of market power and regulation -- challenging widely held views about the efficiency of markets.
According to the Royal Swedish Academy of Sciences: “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.”
“We have been looking forward to Jean Tirole’s visit to campus this year as the 2014 Nemmers Prize recipient -- and especially to the conference that will be centered on his work this spring,” Northwestern Provost Daniel Linzer said. “And we are thrilled that the extraordinary work of this world-renowned scholar also has been recognized with the Nobel Prize in economics.”
Tirole has a long-standing association with Northwestern. Since 2000, the Institut D’Economie Industrielle, the world-renowned industrial economics research center of which Tirole is the economics director, and Northwestern’s Center for the Study of Industrial Economics have held an annual conference in which researchers from the two centers present and discuss each other’s work. The conference alternates between Toulouse and Evanston.
“Economics Nobel for Work on Regulating Business” was the headline on one of the stories about Tirole that ran in The New York Times Tuesday (Oct. 14).
“He has spent decades dissecting the many industries where competition does not fulfill the textbook promise that prices will be low and quality will be high,” said The New York Times reporter Binyamin Appelbaum.
Tirole is a pioneer in the application of mathematics, including game theory, to devise rules that guide government regulation of markets with the goal of producing better outcomes that reach widely throughout society.
“Taking tools of game theory and information economics developed in the postwar decades, he and his colleagues helped to change the way governments and economists think about an old subject that is becoming ever more important to our networked economy: the regulation of companies with monopoly power,” John Cassidy wrote in an Oct. 13 story in The New Yorker.
In a Q-and-A that also ran Oct. 14 in The New York Times, Tirole said, “There’s no easy line in summarizing my contribution and the contribution of my colleagues. It is industry-specific. The way you regulate payment cards has nothing to do with the way that you regulate intellectual property or railroads. There are lots of idiosyncratic factors. That’s what makes it all so interesting. It’s very rich.”
“Jean Tirole’s contributions have ranged across most areas of microeconomics -- from abstract theory to applied policy problems,” said John Panzar, professor emeritus of economics at Northwestern.
“However he is probably best known for making economists aware of the importance of information and incentives for the regulation of imperfectly competitive firms and industries,” he said.
During his visit to Northwestern in the spring as the recipient of the 2014 Nemmers Prize in economics, Tirole will present a public lecture and participate in a conference on another aspect of his work concerning liquidity, bubbles and crises.
Tirole has worked for decades on the effects of credit bubbles and said the 2008 to 2009 financial crisis was above all the result of insufficient regulatory institutions, according to an Oct. 13 Reuters article.
Reuters quoted Tirole from his discussion with reporters during a telephone news conference in Stockholm: \"I think banking is a very hard thing to regulate, and we economists and academics have to do more work on this.”
Nemmers prizes are made possible through bequests from the late Erwin Plein Nemmers, a former member of the Northwestern faculty, and his brother, the late Frederic Esser Nemmers, both of Milwaukee.
The 2014 Nemmers Prize in economics marks the 11th time Northwestern has awarded the prize. Earlier this year, the University announced Michael Hopkins as the recipient of the 2014 Frederic Esser Nemmers Prize in Mathematics and Esa-Pekka Salonen as the recipient of the 2014 Michael Ludwig Nemmers Prize in Music Composition.