BOOK REVIEW: Vane, Howard R. and Mulhearn, Chris.

Abstract

Students embarking on their post-secondary education, particularly in business or social sciences, quite often take courses in introductory economics during their first year. They come across a variety of introductory textbooks that come with titles that sound quite mundane: Economics, Principles of Microeconomics, Introduction to Macroeconomics, just to name a few. But little do they realise that some of these basic texts were authored by people who were nothing less than extraordinary. That these individuals, giants in the world of academia by their own right, devoted their lifetime to research and create groundbreaking theories and applications that culminated in the ultimate honour that can be bestowed upon them: the Nobel Memorial Prize in Economic Sciences. Indeed, the likes of Paul Samuelson and Joseph Stiglitz are more than just names that appear on the covers of introductory textbooks; as are the likes of John Hicks, Kenneth Arrow, Wassily Leontief, Beril Ohlin, James Tobin, Gerard Debreu, Robert Solow, Ronald Coase, among others who have been immortalised by the models and theorems named after them that are religiously taught and studied worldwide by a plethora of academics and students. The Nobel Memorial Laureates in Economics: An Introduction to Their Careers and Main Published Works by Howard R. Vane and Chris Mulhearn7 is a Professor Howard R. Vane is currently Professor of Economics at Liverpool Business School, Liverpool John Moores University, Liverpool, UK; and Dr. Chris Mulhearn is Reader in Economics at Liverpool Business School, Liverpool John Moores University, Liverpool, UK. Independent Business Review, Volume 4, Number 1, January 2011 very useful compendium on the fifty-five Nobel Memorial Laureates in Economic Sciences from 1969 till 2004, The authors have specifically targeted undcrgiaduate and graduate students in order to give them a better understanding ot the leading lights of economics and the ideas that have moulded the shape of economics into its current state. According to the authors, “students are lar better placed to understand economics if they have some awareness and appreciation of the origins and development in the main field within the discipline”, and hoped that they would even be encouraged to sample the original works of the laureates for themselves. The structure of the book is very simple: a detailed introductory chapter giving an overview of the Nobel Memorial Prize in Economics, following which the remainder of the hook is devoted to the Nobel laureates themselves. The life and work ot each laureate have been described in separate chapters, each ranging from three to six pages in length. The introductory chapter on the Nobel Memorial Prize in Economics begins with a historical background of the prize in Economics in context of the other Nobel prizes that were introduced originally since 1901, namely Physics, Chemistry, Physiology or Medicine, Literature and Peace. Further discussion is given on the nomination and selection, dispelling some common myths and misconceptions that are nurtured by the media when the names of the laureates are announced each year. Several classifications made in terms of the broad disciples made in earliei studies by Lindbeck (1985, 2001), have been discussed, while the authors made their own classifications in eleven broad fields of study within economics. The authors have further discussed at length the citizenship, affiliations at the time of award, as well as their educational backgrounds. Controversies surrounding the Nobel Memorial awards and means of forecasting future laureates have also been discussed. The authors mention that economists such as John Maynard Keynes and Joan Robinson were “arguably denied the prize because they died before it was instigated or before the debt to them could be honoured”. Wahid (2002) has added Irving Fisher and Joseph Schumpeter to the list of notable absentees. The chapter concludes with a tabic summarising the laureates in chronological order of the award with details on their citizenship, affiliated universities, broad field of study and prize citation. It is also interesting to note that many of the Nobel Memorial laureates in Economics had their background in disciplines such as mathematics, physics, law and history. The fact that a significant number of laureates are mathematicians by training has generated a lot of discussion (Quddus & Rashid, 1994). Based on the recipients till 2004, the authors noted that all were male. This monopoly was subsequently brought to an end in 2009 by Elinor Ostrom, who became the first woman to win the prize for her analysis of economic governance, particularly on her study of common pool resources. - Most of the book, as mentioned earlier, focuses on the lives and works of the laureates themselves. The authors had mentioned that the Nobel Memorial awards in the first two decades were more aimed to “clear the backlog of specific achievements by outstanding economists, many of whom made their seminal contributions in the 1940s and 1950s and even earlier”. Indeed, the very first Nobel laureates, Ragnar Frisch coined the term “econometrics” in 1926, while Jan Tinbergen constructed the first macroeconomic model in 1936. Both Frisch and Tinbergen were the creators of the Econometric Society. Paul Samuelson s Keynesian cross diagram and Simon Kuznet’s measurement of national income using components such as consumption, saving and investment, are standard tools today for teaching income determination in first year macroeconomics courses. John Hicks’s pioneering use of indifference curves to explain consumer behaviour, and IS-LM (Investment Saving / Liquidity preference Money supply) diagram to establish equilibrium in the goods and money market, are core components of intermediate microeconomics and macroeconomics respectively. Wassily Leontiefs input-output analysis is a standard tool used in introductory mathematical economics.