3 Americans Win Nobel Prize In Economics

By: CBS/AP (Posted by Amanda Lanum)
By: CBS/AP (Posted by Amanda Lanum)

STOCKHOLM (CBS/AP) - Americans Eugene Fama, Lars Peter Hansen and Robert Shiller have won the Nobel Memorial Prize in Economic Sciences.

The Royal Swedish Academy of Sciences said the three had laid the foundation of the current understanding of asset prices.

While it's hard to predict whether stock or bond prices will go up or down in the short term, it's possible to foresee movements over periods of three years or longer, the academy said.

"These findings, which might seem surprising and contradictory, were made and analyzed by this year's laureates," the academy said.

Fama, 74, and Hansen, 60, are both associated with the University of Chicago. Farma, a researcher in the areas of economics and investment, has been called the "father of modern finance." He is chairman of the Center for Research in Security Prices at the university's Chicago Booth School of Business.

Hansen, who studies dynamic economic models in environments with uncertainty, chairs the Institute Research Council.

Shiller, 67, is the Sterling Professor of Economics at Yale University. He is author most recently of "Finance and the Good Society" (Princeton University Press), which explores how finance can be used to further societal goals.

Shiller, an economist famous for having warned against bubbles in technology stocks and housing, said he reacted with "disbelief" when he received the telephone call from the academy early Monday.

"A lot of people have told me they hoped I would win it, but I'm aware there are so many other worthy people that I had discounted it, so I would say no, I did not expect it," he told reporters in Stockholm by telephone.

Starting in the 1960s, Fama and others showed how difficult it is to predict stock prices in the short run, findings which changed market practice, for example with the emergence of index funds, the academy said.

Two decades later, Shiller showed that there is more predictability in the long run in stock and bond markets, while Hansen developed a statistical method to test theories of asset pricing.

"These are three very different kinds of people and the thing that unites them all is asset pricing," says David Warsh, who tracks academic economists on his Economic Principals blog.

American researchers have dominated the economics awards in recent years; the last time there was no American among the winners was in 1999.

The Nobel committees have now announced all six of the annual $1.2 million awards for 2013.

The economics award is not a Nobel Prize in the same sense as the medicine, chemistry, physics, literature and peace prizes, which were created by Swedish industrialist Alfred Nobel in 1895.

Sweden's central bank added the economics prize in 1968 as a memorial to Nobel.

© 2013 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.


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