Monday, October 14, 2013 /NICLAS ROLANDER
STOCKHOLM--A U.S. trio has been awarded this year's Nobel Prize in Economic Sciences for their empirical analysis of asset prices, seen as a critical component in spotting trends in the markets.
Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller have "laid the foundation for the current understanding of asset prices," the Royal Swedish Academy of Sciences said when announcing the award in Stockholm Monday.
Monday's recognitions add three more U.S.-based experts to the group of 2013 Nobel recipients honored for the fruits of their research. Three U.S.-based scientists were awarded the Nobel Prize in medicine last Monday, and three more U.S.-based scientists won the Nobel Prize in chemistry two days later.
Among the better known of Monday's economics experts is Mr. Shiller, a 67-year-old professor at Yale University who is famous in economic circles as a co-creator of the Case-Shiller Index of U.S. house prices.
Mr. Fama, 74 years old, was cited for his 1960s research, which showed that stock prices are extremely difficult to predict in the short run, and contributed to emergence of so-called index funds in stock markets. Mr. Hansen, 60, is a professor at the University of Chicago who developed "a statistical method that is particularly well suited to testing rational theories of asset pricing," the Academy said.
"Together, the research of these laureates had enormous impact on the way we think about academic research on finance," Per Strömberg, professor of finance and private equity at the Stockholm School of Economics, said during the award announcement.
The prize, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established by Sweden's central bank in 1968. Although it is a later addition to the five prizes that Swedish industrialist and scientist Alfred Nobel stipulated in his will, it is usually referred to as the Nobel Prize in economics.
The trio will receive the economics prize, which comes with a cash award of 8 million Swedish kronor ($1.23 million), at a ceremony in Stockholm Dec. 10, the anniversary of Nobel's death.
"A lot of people have told me they hoped I would win it, but I'm aware that there are so many other worthy people that I had discounted it," Mr. Shiller said during a news conference. "Finance drives modern civilization…Our best activities have to be financed and I want to see finance develop further to serve humankind."
He said "we've been through financial crises many times and we have generally learned from them."