Monday, October 14, 2013

Nobel Shout Out

So, the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013" prize has been awarded.  The Bloomberg version.

I have met Hansen, don't know Shiller personally, and know Gene Fama pretty well.   And I am (as they say here in the South) tickled at this result.  In the early 1980s, I discovered Fama's work, and spent about five years reading it all.  I have kept up a little bit since, and I think the combination of insight, elegance, and empirical connection is just unparalleled.

Here, for example, Gene has a series of papers that completely changed the way I thought (and think) about non-profits.  Non-profits are NOT "non-profit," they just happen not to be equity-financed.  That has implications for the way they behave, what their goals are, etc.  But it does not make them immune from incentives.  Check it out:
  • Eugene Fama, "Agency Problems and the Theory of the Firm," Journal of Political Economy (April 1980). 
  • Eugene Fama and Michael Jensen. "Separation of Ownership and Control", Journal of Law and Economics (June 1983). 
  • Eugene Fama and Michael Jensen. "Agency Problems and Residual Claims", Journal of Law and Economics (June 1983).  
(you may want to tack on Michael C. Jensen and William H. Meckling (1976). “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure.” Journal of Financial Economics , to be fair).
 
Now, this is not a representative sample, by any means.  It is just where I came in, a self-contained little set of insights.  If you read those four papers, you will be a lot smarter.

I should add, I suppose, that Gene has been quite helpful in pointing out errors when he encounters them.  Pretty often, after I do an "EconTalk" episode, Gene will send an email that lists errors, factual or logical, that I have committed.  And he is, so far at least, always correct.

Congrats to Gene!


1 comment:

Angus said...

Nice post, Mike. It's wild that Fama grades your podcasts!