13/10/2026
On 10 December 1969, Ragnar Frisch of Norway and Jan Tinbergen of the Netherlands entered a club no economist had belonged to before. Honoured for their pioneering work in econometrics, they became the first recipients of a new prize associated with Alfred Nobel. Economics had seemingly secured its place alongside the natural sciences.
But the prize was no ordinary addition to Nobel’s legacy. Its creation involved political rivalry, institutional ambition and an extraordinary exercise in academic diplomacy.
Alfred Nobel died in 1896, leaving instructions for five prizes: physics, chemistry, physiology or medicine, literature and peace. Economics was conspicuously absent. Despite building an industrial fortune from 355 patents, including dynamite, Nobel harboured a deep distaste for commercial life. In private correspondence, he declared: “I hate business with all my heart.”
Seven decades later, Sweden’s central bank would attach his name to a discipline he had never chosen to honour.
The story begins with Sveriges Riksbank, founded in 1668 and widely regarded as the world’s oldest central bank. Its approaching 300th anniversary presented Governor Per Åsbrink with an opportunity to secure something more enduring than a commemorative celebration: international prestige.
But there was a political backdrop.
For decades, Sweden’s Social Democratic government had pursued a welfare-state model built around redistribution, full employment and public provision. Monetary policy operated within this framework. Interest rates were regulated, credit was rationed, and the central bank was expected to support government financing.
The Riksbank increasingly resented these constraints. Its officials believed monetary policy should enjoy greater independence from elected politicians.
The conflict erupted in July 1957 when Åsbrink unilaterally raised the discount rate by one percentage point. The episode became known as the “one per cent coup”. To the government, it represented an unacceptable assertion of central-bank autonomy.
Further disputes over the bank’s accumulated profits eventually produced a compromise that allowed funds to be retained for its anniversary celebrations.
Åsbrink saw his opening.
The Riksbank would finance a permanent economics prize, covering its monetary award and administrative costs. The Royal Swedish Academy of Sciences, already responsible for selecting the physics and chemistry laureates, would choose the winners.
Assar Lindbeck, a young economist increasingly associated with market-oriented thinking, became an influential intermediary between the bank and Sweden’s academic establishment. He helped build support among leading economists and influential figures within the Nobel Foundation.
Resistance was substantial.
Members of the Nobel family regarded the proposal as an appropriation of Alfred Nobel’s legacy. Some natural scientists questioned whether economics, with its competing theories and historically contingent conclusions, deserved recognition alongside disciplines governed by universal physical laws.
The political climate of 1968 added another dimension. Radical intellectuals feared that a prize financed by a central bank could lend scientific legitimacy to particular economic doctrines.
The Nobel Foundation eventually accepted the proposal, subject to strict conditions. The Riksbank would bear the full financial burden; the award could not formally be called a Nobel Prize; and no further prizes of this kind would be established.
Thus emerged the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
The distinction was legally important, even if it soon disappeared from popular understanding.
The controversies began almost immediately.
In 1974, the award went jointly to Gunnar Myrdal and Friedrich Hayek, economists from opposing intellectual traditions. Myrdal was closely associated with Swedish social democracy; Hayek was an influential defender of free markets and classical liberalism.
The pairing demonstrated intellectual breadth, but also exposed the prize’s underlying tensions. Both men expressed reservations about the award itself. Hayek warned that Nobel recognition could confer on economists an authority they did not necessarily deserve.
Two years later, Milton Friedman’s selection triggered international protests. The controversy centred on his association with Chile under Augusto Pinochet, whose military dictatorship had implemented market-oriented reforms influenced by economists trained at the University of Chicago.
For critics, the episode exposed a disturbing paradox: economic liberalisation could coexist with political repression.
The prize was becoming more than a recognition of scholarly achievement. It was also a powerful symbol in the ideological contest over markets, states and democracy.
Lindbeck served on the economics prize committee from 1969 to 1994, chairing it for its final 14 years. During this period, the award developed a pronounced institutional character.
Economists associated with leading American universities became increasingly dominant. Chicago, MIT, Harvard, Stanford, Berkeley, Princeton, Yale and Columbia emerged as particularly influential centres of prize-winning research.
Critics also pointed to notable omissions. John Kenneth Galbraith and Joan Robinson, two formidable economists who challenged important elements of mainstream theory, never received the award.
Their exclusion does not, by itself, establish ideological discrimination. Nevertheless, it raises a broader question: who determines which economic ideas deserve the highest recognition?
The prize operates within an academic system in which prestige is heavily concentrated. Previous laureates, Academy members and selected university professors can nominate candidates. Leading journals shape professional reputations through publication and peer review. Elite universities produce successive generations of influential economists.
These networks reinforce one another.
Paul Samuelson, the 1970 laureate, illustrates this academic lineage. His intellectual influence extended to several future winners, including Lawrence Klein and Robert Merton. Other laureates emerged from overlapping networks of mentorship and collaboration.
Such connections are natural features of academic life. But they also reveal how a relatively small number of institutions can exercise disproportionate influence over what becomes recognised as outstanding economic research.
The result is a prize whose international prestige has often exceeded its institutional and intellectual diversity.
The economics prize was conceived partly to elevate the discipline to the standing enjoyed by the natural sciences. Yet economics remains inseparable from politics, institutions, history and human behaviour.
Its models can be mathematically elegant without fully capturing the complexity of the societies they describe.
Consider Robert Merton and Myron Scholes, who shared the 1997 prize for their contributions to options pricing. A year later, Long-Term Capital Management, the hedge fund with which both were associated, nearly collapsed, threatening wider financial instability.
The episode did not invalidate their theoretical achievements. It demonstrated, however, that mathematical sophistication is no guarantee against catastrophic errors in real-world judgement.
The deeper concern is not that the prize rewards undeserving economists. Its laureates have transformed our understanding of markets, institutions, poverty, employment and human decision-making.
Rather, the danger lies in mistaking institutional recognition for intellectual finality.
Economics encompasses competing traditions, from neoclassical and Keynesian thought to institutionalist, behavioural and heterodox approaches. Each offers insights; none possesses a monopoly on truth.
The Sveriges Riksbank Prize has undoubtedly advanced the discipline’s international standing. But its history also illustrates how scientific prestige can emerge from political negotiation, institutional power and established academic networks.
When the economics prize is awarded each year, its recipients deserve serious attention. Their achievements, however, should be assessed on their intellectual merits, not simply on the authority conferred by a gold medal.
The following 10 Bright Prep questions are modelled on the Digital SAT Reading and Writing section.
Question 1
Which choice best states the central idea of the passage?
A. The Economics Nobel Prize was established primarily to celebrate Alfred Nobel’s interest in economic theory.
B. The creation and subsequent history of the economics prize reveal how academic recognition can be shaped by institutional ambition, political conflict, and intellectual influence.
C. American universities deliberately prevented European economists from receiving the economics prize.
D. Economics cannot be considered a legitimate academic discipline because its theories are politically influenced.
Question 2
According to the passage, what initially motivated Sveriges Riksbank to propose an economics prize?
A. A desire to fulfil an overlooked instruction in Alfred Nobel’s will.
B. Pressure from American universities to recognise economics as a science.
C. An opportunity to establish lasting international prestige during the bank’s 300th anniversary.
D. A government directive to promote Sweden’s welfare-state model.
Question 3
As used in the passage, the word “conferred” in the phrase “the authority conferred by a gold medal” most nearly means:
A. Questioned
B. Bestowed
C. Concealed
D. Exaggerated
Question 4
Which inference about the Nobel Foundation is best supported by the passage?
A. It enthusiastically supported the prize from its inception.
B. It believed economics was more important than the natural sciences.
C. It sought to preserve the distinction between Nobel’s original prizes and the new economics award.
D. It intended to transfer responsibility for all Nobel Prizes to Sveriges Riksbank.
Question 5
Why does the author discuss the 1957 “one per cent coup”?
A. To demonstrate that Sweden’s central bank had become financially insolvent.
B. To illustrate the conflict between central-bank autonomy and democratic political authority.
C. To explain why Alfred Nobel excluded economics from his will.
D. To establish that inflation had permanently destroyed Sweden’s welfare state.
Question 6
Which quotation from the passage best supports the claim that the economics prize was not universally welcomed?
A. “Economics had seemingly secured its place alongside the natural sciences.”
B. “Resistance was substantial.”
C. “The Riksbank would finance a permanent economics prize.”
D. “The prize operates within an academic system in which prestige is heavily concentrated.”
Question 7
The author’s discussion of Gunnar Myrdal and Friedrich Hayek primarily serves to:
A. Show that economists with opposing intellectual perspectives could receive the same award while sharing concerns about its authority.
B. Demonstrate that the selection committee exclusively rewarded free-market economists.
C. Establish that the two economists collaborated extensively on economic policy.
D. Suggest that the Nobel Foundation intended to abolish the prize after 1974.
Question 8
Which choice best describes the author's attitude toward the economics prize?
A. Unconditionally celebratory.
B. Entirely dismissive of its academic value.
C. Critical of its institutional history while acknowledging the importance of its recipients’ contributions.
D. Indifferent to its political and intellectual significance.
Question 9
The author mentions John Kenneth Galbraith and Joan Robinson primarily to suggest that:
A. Their economic theories were conclusively disproved.
B. Their omission raises questions about the intellectual diversity of the prize’s selection process.
C. Both economists refused nominations because they opposed the Nobel Foundation.
D. Only American economists were eligible for the award.
Question 10
Which finding would most directly strengthen the author’s argument that academic prestige can reinforce itself?
A. An increasing number of economics students are studying mathematics.
B. Past laureates and professors at a small group of elite universities account for a disproportionately high share of successful nominations.
C. The economics prize receives more media coverage than the literature prize.
D. The Nobel Foundation has maintained the same medal design for decades.
