Following Zahka: Using Nobel Prize Winners’ Speeches and Ideas to Teach Economics

Abstract

Over 20 years ago, the late William Zahka (1990, 1998) outlined how the acceptance speeches of those who received the Nobel Memorial Prize in Economic Science could be used to teach undergraduates. This article updates and expands Zahka's work, identifying some of the issues discussed by recent Nobel Laureates, classifying their speeches by topic and level of difficulty, and providing some examples of how their work could be integrated into undergraduate courses. Particular examples illustrate how the material might be used in introductory and later courses, and the Laureates’ insights on research are discussed.

Keywords:

• economic education
• economics
• Nobel Laureates
• teaching

JEL codes:

• A22
• B31
• N01

Acknowledgments

The authors thank participants at the National Conference on Teaching Economics, Stanford University Institute for Economic Policy Research, Palo Alto, California, June 2, 2011, and referees and editors of this journal for their comments.

This article is based on a paper that was presented at the National Conference on Teaching Economics held at Stanford University on June 1–3, 2011.

Notes

1. Strictly, the prize is the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It was established in 1968. Throughout the article, the terms “acceptance speeches” and “prize-winning lectures” are used interchangeably.

2. A longer version of this article is available from the CRMA working papers series, University of South Australia, http://www.unisa.edu.au/crma/workingpapers.asp. (Shanahan, Wilson, and Becker (2011-11).

3. Quiggin (2011) argues that although there have been advances in economic thought, that which is taught and practiced in the name of macroeconomics has changed little. As evidence, he highlights the 2008 financial and economic crisis that caught many economists by surprise.

4. See Dugan's (2005) “Sharpe Point: Risk gauge misused.” To quote Sharpe in the Wall Street Journal article, “Past average experience may be a terrible predictor of future performance” (Dugan 2005, C. 1). Three years before the 2008 collapse in markets, Sharpe warned about hedge funds’ misuse of his work. Students may also find it ironic that Sharpe himself fell into the trap of confusing average behavior with causal linkages.

5. The example used here is taken directly from Robert Aumann's Nobel Prize winning lecture (2005, 353).

6. Examples can be constructed for first-year students to evaluate whether the threat of punishment is credible, while a broader discussion on the acceptability of eternal punishment also is open to political economy students.

7. Whether this game is extended to reveal a proof for the Folk Theorem probably depends upon the schedule of the class and its level. An interesting aspect that can at least be discussed informally is the requirement that Player 2 carry out the threat if Player 1 becomes greedy to an extent that is unprofitable for him or her to do so. Moreover, punishment by Player 1 (play greedy) is required in the event that Player 2 does not punish as promised for the cooperative equilibrium to be sustained.

8. Of the 67 Nobel Prize winners to date in economics, few are recognized as being pure theorists. The rest were empirically driven. In contrast, and especially at the introductory or principles levels, undergraduate economics tends to be taught as a theory-driven endeavor. Use of the Nobel Prize winners provides a convenient way to show how economists use data and empirical modelling.

9. See http://nobelprize.org/nobel_prizes/economics/laureates/2008/# (accessed 2 Nov 2010).

10. Some of the motivations and thoughts of Nobel Prize winners can be obtained by accessing the Web-based recorded interviews and banquet speeches that each prize winner delivers.