Nobel Prize in Economics

Nobel Prize in Economics

Subject: Economy

Context: The Nobel Prize for Economics 2022 has been awarded to Ben Bernanke, Douglas Diamond and Philip Dybvig for their role in research related to how banks function.

Contribution-

• Role of banks in the economy, particularly during financial crises–why we have banks, how to make them less vulnerable in crises and how bank collapses exacerbate financial crises.
• Ben S Bernanke:
  • Through statistical analysis and historical source research, Bernanke demonstrated how failing banks played a decisive role in the global depression of the 1930s, the worst economic crisis in modern history.
  • It added the importance of well-functioning bank regulation.
• Douglas W Diamond and Philip H Dybvi:
  • They developed theoretical models explaining why banks exist, how their role in society makes them vulnerable to rumours about their impending collapse, and how society can lessen this vulnerability.  

Nobel Prize for Economics:

• Established: Unlike the other Nobel prizes, the economics award wasn’t established in the will of Alfred Nobel but by the Swedish central bank in his memory in 1968.
  • This prize was started in the year 1968 by the donation from the central bank of Sweden called “SverigesRiksbank” to the Nobel Foundation in order to commemorate the 300th anniversary of the central bank.
• The Nobel peace prize in Economics is officially titled as “SverigesRiksbank Prize in Economic Sciences” in Memory of Alfred Nobel”.

Prize money-The Nobel prize consists of a gold medal, a diploma and a cheque for 10 million Swedish kronor–roughly accounts for Rs 8.33 crore.