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- [00:05]
Paul Milgram
Paul, it's.
- [00:08]
Esther Duflo
It's Bob Wilson. Yeah. You've won the Nobel.
- [00:12]
Paul Milgram
You've won the Nobel Prize. And so they're trying to reach you, but they cannot. They don't seem to have a number for you.
- [00:19]
Esther Duflo
We gave them your cell phone number.
- [00:23]
Kari Martain
Yeah, I have.
- [00:25]
Christopher Pissarides
Wow.
- [00:26]
Narrator / Sue Windibank
That was the moment at 2 in the morning, Californian time, when US academic Robert Wilson had to rouse his sleeping neighbour and Stanford University colleague Paul Milgram to deliver the news that the two had just won the 2020 Nobel Prize for Economics. A moment preserved for us all to enjoy on Paul's door cam. Although there are many rumours every year, there's no shortlist, so it always comes as a surprise for those who win what is one of the most globally revered academic awards. The Nobel Prizes were established in 1900 at the behest of Alfred Nobel, a Swedish chemist, inventor and industrialist, known in particular for his invention of dynamite. In his will, he stated that his fortune was to be used to reward those who have made the most significant contributions to humanity. The prizes would recognise achievements in physics, chemistry, physiology or medicine, literature and peace. Economics would come much later, in 1968. The prizes are awarded in October every year. Welcome to lseiq, the podcast where we ask social scientists and other experts to answer one intelligent question. I'm Sue Windibank.
- [01:44]
Charlotte Kellaway
And I'm Charlotte Kellaway. We're from the IQ team where we work with academics to bring you their latest research and ideas and talk to people affected by the issues we explore. In this episode, we'll be pulling back the curtain and asking, what is it like to win a Nobel Prize? We'll find out what it's like to get that all important call from the Royal Swedish Academy of Sciences. Does a Nobel Prize change your life? Two winners. Talk to us about the reality of life after the prize and we'll hear what it's like when it's your dad who wins.
- [02:17]
Christopher Pissarides
This year's Prize in Economic sciences is about markets where sellers and buyers have difficulties finding each other.
- [02:25]
Narrator / Sue Windibank
Sir Christopher Pisirides, Regis professor of Economics at LSE, won his Nobel Prize in Economics in 2010. He was recognised along with Peter diamond from MIT and Dale Mortensen from Northwestern University. The prize recognised their work on the economics of unemployment, especially job flows and the effects of being out of work. I asked him how he found out that he had won.
- [02:51]
Christopher Pissarides
Well, of course, memories are very vivid still of that day. The way you find out is that you get a call about an hour before the public announcement is made. And I remember it was a Monday. Economics is always given on a Monday. And it somehow didn't cross my mind that it was the day that the Economics Nobel Prizes were going to be announced. I remember I had a cold, not a very, very serious one, but I didn't have teaching at the lse, so I thought, oh, I'll stay home. I would not answer the phone. I would just take it easy and recover. And then when the phone rang, my mobile rang about 11 o' clock in the morning. I thought out of curiosity, always, look who is quoting you. And I saw that it was an international number and the code I vaguely recognized as being Sweden. I thought, oh. And then suddenly he told me, oh, I thought. So I answered the phone and he said, oh, hello, is that Christopher Pizaridis? I said, yes. He said, you have a very important phone call from Sweden. Can you take it? Are you in a private place? I said, yes, it couldn't be more private alone at home. Obviously, Nobel Prize is the biggest scientific prize, so you would think that at least people outside think that Nobel Prize winners would be so serious. You know, they are told about the price, they take it in their stride or seriously, or wait. But in fact it's exactly the opposite. You start thinking sort of more superficial, silly things, if you like. In fact, my, my thought was that I should keep quiet until she finishes talking at least. And then, oh, my God, I hope I don't say something silly. And they say, sorry, we changed our mind.
- [04:34]
Narrator / Sue Windibank
Well, I actually have a shared memory of that day with you because I was working in the LSE press office and we were watching the announcements and then your name announced. Yes, and we were, we were just so surprised that it was an LSE winner. And we were so excited. And then our next thought was, where is he? We don't know where he is because there's no short list for a Nobel Prize, so you never know. Yes, but it might be you.
- [05:01]
Christopher Pissarides
Yes. In fact, I got a phone call from the LSE saying, come immediately, there is a press conference for you to get. And I thought, oh my. I stayed home because I wasn't feeling well. No, no, you must come now. So I quickly put on a student came straight here.
- [05:15]
Narrator / Sue Windibank
I do remember you being powered by LEMSIP that day.
- [05:18]
Christopher Pissarides
Yes, exactly.
- [05:19]
Charlotte Kellaway
Of course, nobody expects a Nobel Prize. And so Professor Esther Duflo from MIT was also taken by surprise when she got the call telling her she had, at 46, become the youngest winner of a Nobel Prize for Economics, an award she shares with her husband, Abhijit. Banerjee, also from mit, along with Michael Kramer, who was at Harvard University at the time. Here she is telling me how it happened in October 2019.
- [05:46]
Esther Duflo
Well, that was actually the middle of the night because we are in Boston. So that's. They called us I think in Boston. It was about 3 or 4 in the morning. And so of course when you get a phone call From Europe at 3 or 4 in the morning, the first worry is that oh my God, what is going on with my parents and so on. So it was very doubly welcome to hear that. It was the news they wanted to share. And so they first called me and they said, we want to inform you you won the Nobel Prize. And my first question was with whom? And then since they said with Abhijit Banerjee, I said okay, I'll give him the phone. And then the president of the Academy of Science told me, okay, you have to get shower, get a good cup of tea because at 6 you have a press conference, 6am Boston time. And I said okay. And Abhijit looks at me and said I'm going back to sleep. I was like, what? We just won a Nobel Prize. And he tells me it's going to be a long day. So he went back to sleep and I got up and I took a shower and got some tea and then got ready for the press conference. And then the day was pretty quick after that. Immediately after that we got like deluded by emails and MIT wanted to organize a press conference. So I'm like yes, yes, I can do a press conference. But not at the time you said, because my daughter has a concert. She had a small concert with her chorus. So I have to be to the at our concert. And so they kindly organ changed the press conference time and then we had a party. And after that kind of, it sort of launched a big whirlwind of event for the first, for the next few weeks.
- [07:54]
Narrator / Sue Windibank
Of course, winning a Nobel is the culmination of years of work for Christopher Pisserides. His interest in unemployment goes back to his PhD thesis in the 1970s when joblessness was increasing. At the time, there was no convincing explanation in economics as to why there were people who wanted jobs but couldn't get them even though companies were hiring.
- [08:18]
Christopher Pissarides
There are many issues that economic theories pre existed in terms of companies that want to hire workers and workers who want jobs. So the two come together and you have a demand curve and the supply curve and need to intersect and the middle will give you where the labor market is going to be. It's a nice simplistic model for the first two months that you're studying economics, but from then on it's nice as a foundation, if you like, of what is coming next. Whereas when we think about the labor market in practice, what do we do? What we want is to get a job. We don't jump into the first job that we find. We look at many jobs, we compare them, we talk to people who know more, we gather information about these jobs. And at the same time, when the employer is looking for workers, they would ask is this worker good for what I'm looking for? Are they motivated? Do they like to come and work for me? These processes are information gathering and when both sides agree that they would be good together, they are going to give you something productive. They come together. And that's basically the idea of how the labor market works. In my model. I call that matching. When you match employers with workers and the process of looking for another high quality job search, you are searching for information. I mean, I remember people asking me, so what's your big idea? And I said, oh, my big idea is that when people want a job, then they spend some time looking for one and when, and they say is that, oh, you know, they gave you a job at the Lambo School of.
- [10:06]
Kari Martain
Economics because of that.
- [10:08]
Narrator / Sue Windibank
You know, I'm sure it's a bit more complicated than that.
- [10:13]
Christopher Pissarides
And my, if I, if I say a little bit immodestly, my, my big discovery, as it were, that open up theory and enable other economists to use it as well, is to find a mathematical relationship which I call the function, a functional form that tells you how many successful meetings between employers and potential employees will be to give you the outcome of this matching process. So if there is any word in economics, if you like, in labor economics, at least by the economics associated with my name, it would be the word matching where you match one with the other, which didn't exist before in economics, before I and other people, obviously my courses, those I shared the prize with, had similar ideas, but completely independently.
- [11:06]
Narrator / Sue Windibank
Chris looked at what happened when people lose their jobs due to shifts in the economy. He developed a model to analyze the various processes and decisions, like government policies, that influence how long it takes for someone to get back into meaningful work. One of his key findings is that it's crucial to prevent long periods of unemployment. The longer someone is out of work, the harder it becomes for them to re enter the job market and find steady employment again.
- [11:33]
Charlotte Kellaway
Esther Daflo and her co winners were awarded the Nobel Prize for their experimental approach to alleviating global poverty. They transformed the field of economics by using randomised control trials to figure out what kinds of interventions actually improve people's lives. Just like in medical research, these trials randomly assign participants to either an experimental group or a control group, allowing researchers to compare the outcomes and see which strategies really make a difference.
- [12:02]
Esther Duflo
The idea is that to know what works and what doesn't work in social policy, we don't have to use guesswork, we can really use methods that are the same than the method that are used in medical science. Because basically, what you want to know when you have a particular policy is what would have happened if that policy had not taken place? Or if you look at a particular program or an intervention, what would happen if the world had been different, but you'd never observe the same person with and without the new policy, in the same way that when you're trying to test a new drug, you never observe the person with, with the drug and without the drug. So the way this is solved for medical research is to create randomized controlled trials. So you take a group of people sufficiently large, and you randomly select, let's say, half of them and you give them the new drug and the other half gets the standard of care. And it wasn't done that often, or in, or maybe close to never in social policy or in development economics, until Michael Kramer really, and Abhijit Banerjee started experimenting with it. There were some examples of randomized control trial in US social policy, but few and far between. And there is really no reason. In fact, it's really important to use that, because in the absence of these randomized controlled trials, if you're trying to look at the impact, say, of providing textbooks in school, you never know whether the results are different in the schools that have the textbook and the schools that don't, because the schools are different for some other reason. So the randomized control trial solves this fundamental data problem, and it's a powerful tool that can be used across many, many sectors and many, many geography, and teaches some very solid lessons that we can move forward from.
- [14:08]
Charlotte Kellaway
Esther and her husband have used randomised control trials to help tackle the problems of poverty by breaking them down into manageable questions, such as how to increase immunisation rates, whether charging for bed nets makes people more likely to use them to prevent malaria, and what strategies work best to keep children in school longer.
- [14:28]
Narrator / Sue Windibank
Some Nobel Prize winners are distinguished not only by their research, but also by what they represent. Esther was not only the youngest winner of the Nobel Prize for economics. She was only the second woman to win it. Another groundbreaking, noble winning academic, considered to be one of the founders of development economics was Sir Arthur Lewis, a St Lucian and the first and so far only black winner of the Nobel Prize in Economics. Sir Arthur died in 1991, but his daughter, Elizabeth Lewis Channon, was kind enough to talk to me along with her nephew in law, Kari Martain. Elizabeth describes her father as a man who was intensely interested in his work.
- [15:11]
Paul Milgram
He was quiet, he was interested in a lot of things, but he basically had one topic of conversation and that was economics. Fortunately, it's a relatively broad field, especially development economics, which is what he was helping found. I just grew up knowing that if I wanted to talk to my father, the easiest way was to read the economists and then there would be all kinds of things we could talk about. He was very intelligent, very bright, genius, probably had a photographic memory or something like he taught himself all kinds of things, things he taught himself German, how to read it, speak it, French obviously.
- [16:05]
Narrator / Sue Windibank
Sir Arthur Lewis was a student at LSE from 1934 to 1937 and a member of staff from 1938 to 1948. In 1948 he joined Manchester University, becoming Britain's first Black professor. In 1979 he was awarded the Nobel Prize jointly with the Theodore W. Schultz for their pioneering research into economic development, with particular consideration of the problems of developing countries. Elizabeth told me about some of her father's foundational research.
- [16:37]
Paul Milgram
He realized that the economies of the world, particularly of the developing countries, had unlimited resource in terms of labor. All of the models until then had been looking more at the industrialized countries where the labor pool was reasonably fixed. And he realized when you're talking about developing countries, the labor is essentially unlimited. There is always somebody else who wants a job. So the supply of labor did not fix the price for labor. It wasn't a resource that you can see scarcity happening in the way you might with the other materials and things like that. And that changed the whole way that you look at, well, how are we going to develop these countries? When he went to college, there was no such thing as development economics to study. He ended up being one of the founders of that branch.
- [17:51]
Narrator / Sue Windibank
Kari reflected on seeing the continuing impact of Sir Arthur's work on a recent trip to the school to celebrate the naming of the Sir Arthur Lewis Building.
- [18:01]
Kari Martain
Last year when we visited the llc. I think what was quite moving was seeing how much of his academia is still featured as foundational coursework for the lse. When you're talking about developmental economics.
- [18:18]
Narrator / Sue Windibank
Sir Arthur Lewis developed two influential models to explain the challenges of underdevelopment. His most famous theory, known as the Lewis model, explores how countries can transform from agrarian or farm based economies into industrial ones. A crucial shift for raising incomes and reducing poverty. Do you have any memories of him winning the Nobel?
- [18:40]
Paul Milgram
My sister and I went with him to Sweden for all of the ceremonies. There was a lot of pomp and circumstance and the Swedes really make an effort to make it memorable. Yes, they have to give a lecture. After all, this is a academic award at heart. Well, academic slash humanitarian. There's this huge dinner party with the King and Queen. My dad was one of the speakers at it, saying, giving thanks for their hospitality and all that. By the time the Nobel came round, he was near the end of his career. He was born in 1915, so by 79 he's pretty much done. And over the course of the years, he got knighted in 63, at which point he already had several honorary degrees. He had worked for the United Nations. He had helped fund the undp, the development program, bringing it out of the special forces into its own program. He had started the transition of the University of the West Indies from a College of London to its own university. He had done all kinds of things. He had headed up the Caribbean Development Bank. So by the time he gets to the Nobel, it's a crowning achievement. Are a lot of achievements.
- [20:34]
Narrator / Sue Windibank
I asked Elizabeth and Kari about Sir Arthur's legacy. Here's Kari. He mentions Lady Gladys, Elizabeth's mother and Sir Arthur's wife, who was a significant force in supporting her husband's achievements.
- [20:47]
Kari Martain
You know, I think obviously Lady Gladys and Sir Arthur, their contributions are massive. And I think that that generation in many ways did so much in, in so much that we're still, I feel like discovering today and rediscovering. We could definitely use more folks like that. And I think that, you know, I'm hoping that from a, from a legacy perspective as we're pushing and honoring that, that legacy, that the, the next Sir Arthur is out there looking through and pushing that for those economic conversations and pushing the new, the new wave. I think that the global economy has changed so much in the past, you know, half decade that we're definitely going to need those new visionary academics to see the way forward for the developing world.
- [21:33]
Paul Milgram
He shows it can be done. I think often people get so caught up in the fact that you look. And the only black people who get prizes get them in entertainment or the arts and literature. And he broke the mold. And he showed that you could. There was nothing inherently about being black that stops you. I think he would be surprised at how strong his legacy has remained, because he was expecting others to build on it.
- [22:17]
Charlotte Kellaway
While Sir Arthur won his Nobel at the end of his career, Esther Duflo is still very much in the midst of hers. She puts her achievements in the context of a wider movement, the Randomistas, who champion the use of random controlled trials in alleviating the challenges of poverty. I asked her how winning the Nobel has changed her life, academically and otherwise.
- [22:38]
Esther Duflo
It's the poet Shemus Yini who described it as a benign avalanche, uncalled for, unexpected, and putting everything, you know, taking everything on its week. And for me, I don't know really, it's hard to distinguish what happened between the Nobel Prize and Covid because we got the Nobel Prize in the fall of 2019 and Covid happened in very beginning of 2020. So everything is a little bit. There's a before and after Nobel Prize which coincides with before and after Covid. In many ways, the basic day to day work is the same. We're still quite young and active and we have to do our research project and that continues. We have to teach students, and we love doing that. And the day to day of that doesn't really change in other ways, of course, because we were already part of a movement. The way we described winning the prize is that it's not so much for us, but it's for an entire movement. And therefore, in winning the Nobel Prize, we feel responsible for sharing it with the movement, not just in term of giving credit, but also in term of whatever makes the movement grow faster. So that gives responsibility in terms of presenting the work, sharing the work, making sure it has policy impact that maybe we had before, but not to that extent. And at the same time, it also provides us with more tools and more people are more willing to listen to us, and access is made easier, which we can also build upon to ensure that the movement thrives.
- [24:31]
Charlotte Kellaway
You were the youngest person to win the prize in this area. Is there any advice you would give to other younger academics who want to make a change in the world?
- [24:40]
Esther Duflo
The key, and that's going to sound very trite, but let me say it anyways, is that you really have to do what seems important to you and feasible to you at a given point in time without worrying about the greater implication. And will that ever win you a Nobel Prize, or will that even be sufficient to finish your dissertation? What I'm seeing with a lot of PhD students in particular is that they are concerned that their ideas are not good enough or are not big enough. And I really went from one small idea to the next one. And it's only over time that you realize that some of these ideas have had more echo than you thought and that maybe the collective together, all of this idea taken together, as well as other people working in the same areas, created something that is very different, very powerful. So I think it's very difficult as an individual to understand the import of what you do. So you have just to assume that it's important to others, if it's important to you, and kind of do it without so much looking. What's the vision? Where is it leading me? In a way, I'm never. I'm not someone who had a huge vision, and yet a vision sort of emerged in from the collective work and effort.
- [26:11]
Narrator / Sue Windibank
I asked Christopher Pisirides how the Nobel had changed his life. And like Esther, he points out that the honor of the award brings responsibility.
- [26:20]
Christopher Pissarides
Well, you see, this is the thing that surprised me, that surprised me most, how your professional life changes, your personal, of course, as well, because the two are so closely interconnected that. That especially people outside academia started looking at you and wanted to communicate with you in a different light than before. It's what another friend of mine, Michael Spence, also won the Nobel Prize for what you call the economic theory of signaling. It's as if you signal something. Here is an economist who can answer all the questions you have, which of course is completely false.
- [27:09]
Esther Duflo
And.
- [27:12]
Christopher Pissarides
So the requests you get to meet people, give advice, talk to decision makers, get research funding for research that will lead to new policy initiatives. And now in academia, the change is much less, of course, and if you said no to everything else, you could continue in exactly the same way. There is a change within the university. They don't ask you to join every committee, for example, and they give you some administrative assistance as well to deal with all this flood of requests. But I do believe, though, that economics has something to offer through policy, to influence policy in what we consider to be the right way, obviously, but it may or may not be. But at least we have something useful to say both to other companies, how they treat their workers, for example, to policymakers, what policies will make real change in society, especially now that economies are looking more and more at the economics of happiness, how to improve well being at work. The current project I'm working on is on well being at work, and we should be doing that if people are prepared to listen to you much more than before the prize, then you should use it and talk to them and try and influence where you can in a way that would improve well being and the standard of living of society. So I'm doing a lot of that kind of activity now than pure academic.
- [29:09]
Narrator / Sue Windibank
What advice would you give to this year's winner of the Nobel Prize for Economics?
- [29:14]
Christopher Pissarides
Step back a little bit and think now I've got a much bigger audience. I've got an audience that is influential in society and in policy and I'm in a position where I could influence decision making. You know, you don't know how much, depends how convincing you are what you say. So just focus on the, on the important things that are going to make a difference. We've got something good to offer. I believe as economies I believe in economics, in the power of economics to improve conditions society. So use it. If you have the ability to go as far as the Nobel Prize, at least make some use of it. You know, you have social responsibilities.
- [30:03]
Charlotte Kellaway
This episode was produced by Charlotte Calloway and Sue Winderbank with help from Sophie Mallet and edited by Oliver Johnson. If you'd like to find out more about the research in this episode, head to the Show Notes and if you enjoy iq, please leave us a review. Coming next on lseiq Mayan Arad, who owns Outer Space. If you like this podcast, you might like the LSE Events podcast, which features talks by some of the most influential figures in the social sciences. Listen to a recent talk, for example, by financial analyst, commentator and investor Ruchir Sharma, about his book what Went Wrong with Capitalism? For more inspiring content, search LSE Lectures and Events. Wherever you get your podcasts.