Three Californians win Nobel Prizes
BERKELEY, Calif. (AP) – Economist George Akerlof took used cars and came up with a new model demonstrating how buyers and sellers interact, becoming one of three Californians to win a Nobel Prize Wednesday.
Akerlof shared the prize with Michael Spence of Stanford University and Joseph E. Stiglitz at Columbia University. The third California winner, K. Barry Sharpless of the Scripps Research Institute in San Diego, shared the chemistry prize.
Akerlof was cited for his work analyzing the market for used cars. He determined that the problem was asymmetric information – sellers knew more about the cars than buyers, who worried they were getting stuck with a ”lemon.” The result was that the market price tended to be set at ”lemon” levels, ultimately driving sellers of good cars out of the market.
”This prize is not a prize for me. It’s a prize for the economics profession,” said Akerlof, a professor at the University of California, Berkeley.
His research has since been broadened into other areas, such as health insurance, where the opposite situation exists – buyers have more information than sellers about their health, forcing rates up.
The economics winners laid the foundation in the 1970s for a general theory about how players with differing amounts of information affect financial markets.
Their contributions ”form the core of modern information economics,” the Royal Swedish Academy of Sciences said in a written announcement.
Sharpless, 60, won half of the chemistry prize for research that opened up a new pathway to create medicines, including some that help treat Parkinson’s disease. The other half of the award was shared by William S. Knowles of St. Louis and Ryoji Noyori of Nagoya University in Japan.
The discovery came when Sharpless and another colleague found that by using a chemical made of tartaric acid and titanium they could isolate one-half of a molecule.
”It was a eureka moment,” Sharpless said.
At a news conference, Akerlof said he was ”totally thrilled,” but still a little stunned by the honor. He began his remarks by thanking his wife, Janet Yellen, sitting in the front row of the audience, who has been ”wonderful ever since the very first day I met her.”
Yellen is also a UC Berkeley professor, and was on President Clinton’s Council of Economic Advisers.
Akerlof, 61, was the second consecutive Berkeley winner of the economics Nobel, known formally as the Nobel Memorial Prize for Economic Sciences. Last year, Berkeley professor Daniel McFadden shared the prize.
”This is becoming a habit,” Berkeley Chancellor Robert Berdahl said.
In keeping with tradition, Akerlof will get a reserved parking spot, a coveted honor on the crowded Cal campus.
Akerlof said when he first got the phone call saying he’d won, ”I didn’t know if it was a joke or not.”
Spence was on vacation in Hawaii when he received the news.
”It’s very exciting. I think all of us in the academic world do what we do for the fun of it,” he said. ”It’s really wonderful to have the work recognized.”
The three economics winners, who share a $943,000 prize, all know each other and kept in close contact while they were working, Spence, 58, said.
”We were all working on different facets of the same problem, but we talked to each other all the time. Academics do that,” he said. ”I was very excited about the work they were doing.”
Sharpless and his family celebrated with morning champagne at their home overlooking the Pacific Ocean.
”It feels very good,” he said. ”It’s been a lot of years since the discovery was made – Jan. 18, 1980. To be honest, for the last 20 years, I’ve been teased by my colleagues” about when the work might be recognized.
Berkeley has had 18 Nobel Prize winners and Stanford has had 21.
The Nobel Prizes for physiology or medicine, physics, chemistry, literature and peace were established in the will of Alfred Nobel, the Swedish industrialist and inventor of dynamite, and were first awarded in 1901. The economics prize was established by the Central Bank of Sweden in 1968 as a memorial to Nobel.
The prizes are always presented to the winners on Dec. 10, the anniversary of Nobel’s death in 1896. To mark the 100th anniversary of the prizes, all living laureates have been invited to the ceremonies this year, with some 150 expected in Stockholm and 30 in Oslo.
On the Net:
Nobel site: http://www.nobel.se
Akerlof’s home page: http://emlab.berkeley.edu/users/akerlof/
Spence home page: http://gobi.stanford.edu/facultybios/bio.asp?ID156
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