John Nash and the Nobel Prize
Alfred Nobel, the Swedish industrial giant and inventor, did not include economics when he put together his 1894 will and created prizes in physics, chemistry, medicine, literature, and peace. The economics prize, the one that was so dramatically awarded to John Nash in 1994, was a stepchild created in 1968 not by the Royal Swedish Academy of Sciences and the Nobel Foundation, but by the Swedish Central Bank, who funds the prize, making it the "unofficial" Nobel.
Some members of the Swedish Academy, which oversees the selection process, originally dismissed the economic prize as a bad idea that cheapened the original prizes, yet for years grumbling Academy members accepted it as a fait accompli. That assumption would change, however, and the economics prize would be fundamentally altered as a result of the selection of John Nash as the winner of the Nobel Prize in Economics in 1994.
Nobel Foundation choices are often unanimous and in theory, the award-giving process is objective. The truth is not quite as pure. Sweden's most important economist, Assar Lindbeck, had dominated the economics selection since it was first established. In an article Lindbeck wrote on the prize in the mid-1980s, he boasted — "So far the proposals of the prize committee to the Academy have been unanimous. A consensus has in fact developed quite 'automatically' within the committee, as if by some kind of invisible hand, after intensive discussion." Those familiar with the process suggest the controlling hand might have been concealed behind closed doors but was hardly invisible, more like an iron fist wielded by Lindbeck.
The economics committee first encountered John Nash's name in the mid-1980s. At that point game theory, the area where Nash did his Nobel-winning work, was as hot as any in the field of economics. When the committee asked a young researcher, Ariel Rubinstein, to report on the most promising Nobel candidates in game theory, Nash's name topped the list.
In 1987, the committee sought the advice of Jörgen Weibull, an economics professor. He, too, put Nash at the head of the list. In the fall of 1989, Weibull visited the Princeton campus to meet Nash. The meeting was more than friendly. Before Weibull left Sweden, Lindbeck had asked him to check out rumors that Nash's schizophrenia had abated. Weibull remembered first meeting Nash, noting that the mathematician looked extremely nervous and was unable to look his visitor in the eye. Nash's conversation took flight a few times, but overall, Weibull found him no more eccentric or paranoid than many academics he knew.
The moment that turned Weibull from a casual informant to a strong supporter of Nash's candidacy was one shared on their way into the Princeton faculty club. "Can I go in?" asked Nash insecurely. "I'm not faculty." The comment elicited compassion in Weibull, who believed the injustice of Nash's persistent obscurity demanded overturning.
In 1993 the economics committee decided to award a prize in game theory the next year. Lindbeck wanted Nash to win part of the Nobel, but he got stiff opposition from another formidable committee member, Ingemar Stahl, who was afraid that Nash might embarrass or even bring scandal upon the committee, damaging the stature of the prize. Nash was a mathematician, not an economist, Stahl argued, had done his work too long ago, had dropped his research at an early age -- and was mentally ill.
Stahl lost the argument, yet he protested the committee recommendation before the full academy, spurring an unprecedented floor debate. Nash and two other candidates would win the economics prize by only a handful of votes, the first vote ever to come so close to defeat. The behind-closed-doors conflagration would give Academy members an excuse and a momentum to completely overhaul the economics prize the next year, transforming it into a social sciences award that included political science, psychology, and sociology, as well as economics.
Afterwards, Lindbeck admitted that his push for Nash had a strong emotional component. Compared to most other Nobel winners "Nash was different," Lindbeck maintained. "He had gotten no recognition and was living in real misery. We helped lift him into daylight. We resurrected him in a way." The man who told Nash the news of his selection, Carl-Olof Jacobsen, noted aging mathematician's reaction: "He was unusually calm. That was my thought. 'He is taking this very calmly.'"