Dr. Amartya Sen did Not win “Nobel Prize in Economics”

Contrary to popular perception and media reports, Dr. Amartya Sen did not win the “Nobel Prize”. There is no “Nobel Prize in Economics”.

Dr. Sen won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1998.

Source: https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1998/sen-facts.html
Every year a Nobel Prize in Economics is awarded when in fact there is no “Nobel Prize in Economics.” There is only a “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.” That prize, which was invented by the Swedish central bank nearly 75 years after Alfred Nobel’s death, is an annoyance to the recipients of the five actual Nobel Prizes, those scholars from excluded scientific disciplines such as astronomy, and a living descendant of the donor, Peter Nobel, who has denounced it as a “PR coup by economists.”

Source: Orlando Patterson, John Cowles professor of sociology at Harvard University, where Ethan Fosse is a doctoral candidate in sociology. They are co-editors of “The Cultural Matrix: Understanding Black Youth.”

Do we give undue importance to Economists like Amartya Sen?

The fundamental problem is over reliance on Pseudo-Science of Economics.

It’s not the statistical models used by economists that is the problem, but the rejection of qualitative methods, other fields and viewpoints. The gulf between the economic view of the world and that of the lived experiences of the general population is often vast. For example, in June 2009, the National Bureau of Economic Research declared that the United States was no longer in a recession, in stark contrast with the felt, economic experience of 88 percent of Americans the following year.
It’s no wonder, then, that the real-world implementation of mainstream economic ideas has been a string of massive failures. Economic thinking undergirded the “deregulation” mantra leading up to the Great Recession of 2007–2009, and has fared no better in attempts to “fix” the ongoing crisis in Europe. However, nowhere is the discipline’s failure more apparent than in the area of development economics. In fact, the only countries that have effectively transformed from the “Third” to the “First World” since World War II violated the main principles of current and previous economic orthodoxies: China plus the “East Asian Tigers” of Singapore, Hong Kong, Taiwan and South Korea, whose policies entailed extensive state intervention into the economy, institutional reforms and the manipulation of prices and markets. Only recently have economists come to accept the primacy of institutions in explaining and promoting economic growth, a position long held by sociologists and political scientists.
The dominance of economistic thinking in domestic policymaking has similarly led to expensive, frequently disastrous failures. In many of these instances the expertise of sociologists and other academics more suited to the topics at hand were ignored or thoroughly rejected. A clear case in point is the Moving to Opportunity program, a randomized experiment in the 1990s that moved poor families to slightly less poor neighborhoods. Controversially, the researchers found no impact on earnings or educational attainment. The backlash was severe and swift, as sociologists, many of whom had been studying the impact of neighborhoods on poverty for decades, appropriately criticized the limited intervention and narrow focus on a small set of outcomes over a relatively short time period. It also meant scuttling policies that might have resulted in desegregation and real improvements in the housing and life chances of residents of America’s most impoverished neighborhoods.

The fundamental issue is highlighted by Tyler Durden.

As someone who rather enjoys voyages of the imagination, the use of mathematical models in economics is intriguing. The pretension that through using formal mathematical techniques and process we can not only accurately understand, but accurately predict the result of changes in the economy is highly seductive. After all, we can accurately predict the future, right?
Wrong. The wonderful and terrible and confounding thing about our world is that it is a deeply unpredictable place, at least in the economic sphere where each number (for instance “aggregate demand” or “aggregate supply”) in an equation may loosely refer to millions of huge, complex and dynamic events. When you’re using huge simplifications to describe reality, those simplifications may miss the important details, and your projections may go askew.

Not all modelling is equal. Newton’s model of gravitation (since superseded by Einstein’s relativity) makes relatively accurate predictions about how gravitation works, and what would happen to an object dropped 500 metres above the Earth. NASA used Newton’s equations to fly to the Moon.

The key qualitative difference (from Physics, for example), though, is that mathematical economic theories don’t accurately predict the future. Ben Bernanke — the chairman of the Federal Reserve, and one of the most-cited academic economists in the world told the world that subprime housing was contained. That is the economic equivalent of Stephen Hawking telling the world that a meteorite is going to miss the Earth, when it is really going to hit. Physicists can very accurately model the trajectories of rocks in space. But economists cannot accurately model the trajectories of prices, employment and interest rates down on the rocky ground.

Tyler scathingly comments:

The thing that I believe modern economists are most useful for is pointing out the glaring flaws in everyone else’s theories. Steve Keen has made a public name for himself by publishing a book entitled debunking economics, in which he explains the glaring and various flaws in modern economic modelling (DSGE, New Classical, etc).

With repeated proven inability to predict the future, fame seeking economists like Dr. Amartya Sen, resorts to cheap gimmicks like criticizing democratically elected governments without valid backing evidence (not that it would matter as the foundation itself is flawed) simply because they do not conform to his world view.

Dr. Patterson sums it up well:
While the annual ritual of economists awarding themselves a Nobel Prize in Economics may seem purely academic, the devastating consequences of placing too much authority in the ideas and policies of economists is too important to ignore.