Nobel Ironies

Not many people can claim to personally know a Nobel prize winner, but when Edmund S. Phelps was recently named the 2006 winner in economics, David Kennett’s tally rose to three. Professor of economics at Vassar with a particular interest in comparative and international economics, Kennett was a PhD student at Columbia University under Phelps, Robert Mundell (1999 winner), and William Vickrey (1996 winner). Vickrey, in fact, was both his thesis adviser and friend. “Of course they were all brilliant in their way,” says Kennett, “but Vickrey was the most intelligent man I’ve ever known well – extraordinarily intelligent.”

According to Kennett, the prize in economics is a bit different from the others because it was established more recently (1969) and is funded by the national bank of Sweden, the Sveriges Riksbank, in memory of Alfred Nobel, but not from Nobel’s original bequest. It is also different because, unlike the prizes in science and medicine, it is more of a lifetime achievement award, rather than a prize for a specific advance. Nevertheless, it is a tidy sum – one million dollars.

Mundell, who is Canadian, won the prize “for his analysis of monetary and fiscal policy under different exchange rate regimes.” Kennett’s translation: “He had a significant influence on how economists view exchange rates.” Before his win, Mundell bought a castle in Italy. When asked how the Nobel would change his life, he said, “Now I know how I’m going to make repairs on the castle.”

Asked the same question a few years earlier, Vickrey, also a Canadian, had said, “I don’t need the money, but I could use the bully pulpit.” “He was a very unusual man,” says Kennett, “six-foot-two, crazy white hair. He used to rollerskate from Columbia to 125th Street Station – in the ’50s and ’60s, mind you. He was a Quaker, and he saw unemployment as a huge waste of human potential and well-being, and he was angry about it. In the 1980s some economists developed the theory of the natural rate of unemployment, and Vickrey felt this gave the government an excuse not to do anything about it. He intended to use his Nobel prestige to influence fiscal policy to reduce unemployment.”

Sadly, Vickrey has the distinction of being the shortest lived of Nobel winners. A few days after winning, he was driving himself to Boston where he was scheduled to give a lecture, but he never arrived. They found him in his car the next day, the victim of a heart attack.

Even more ironic – Phelps won his prize “for his analysis of intertemporal tradeoffs in macroeconomic policy.” Kennett translation: “in part for his work on the natural rate of unemployment. Phelps’s work says that if you try to make the situation better in the short run, you just get more inflation in the long run.”

Were they good teachers? “Quite honestly? No. They were inspirational mentors, but I doubt they would have lasted in the classroom at Vassar.”