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The
Prize in Economic Sciences 2000
The Royal Swedish Academy of Sciences
has decided that the Bank of Sweden Prize in Economic Sciences in
Memory of Alfred Nobel, 2000 will be shared between
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Jim Heckman is the Henry Schultz Distinguished
Service Professor of Economics at The University of Chicago. His recent
research dealt with such issues as evaluation of social programs,
econometric models of discrete choice and longitudinal data, the economics
of the labor market, and alternative models of the distribution of income
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DANIEL
L. MCFADDEN
University of California, Berkeley, USA.
E.
Morris Cox Professor of Economics
Director, Econometrics
Laboratory
Nobel
Laureate in Economics |
In the field of micro econometrics, each of the laureates has
developed theory and methods that are widely used in the statistical
analysis of individual and household behavior, within economics as
well as other social sciences.
Citation of the Academy:
"to James Heckman for his development of theory and methods
for analyzing selective samples and to Daniel McFadden for his
development of theory and methods for analyzing discrete choice.
"
Microeconometrics - on the boundary between economics and
statistics - is a methodology for studying micro data, i.e.,
economic information about large groups of individuals, households,
or firms. Greater availability of micro data and increasingly
powerful computers have enabled empirical studies of many new
issues. For example, what determines whether an individual decides
to work and, if so, how many hours? How do economic incentives
affect choices of education, occupation, and place of residence?
What are the effects of different educational programs on income and
employment? James Heckman and Daniel McFadden have resolved
fundamental problems that arise in the statistical analysis of micro
data. The methods they have developed have solid foundations in
economic theory, but have evolved in close interplay with applied
research on important social problems. They are now standard tools,
not only among economists but also among other social scientists.
Available micro data often entail selective samples. Data on
wages, for instance, cannot be sampled randomly if only individuals
with certain characteristics - unobservable to the researcher -
choose to work or engage in education. If such selection is not
taken into account, statistical estimation of economic relationships
yields biased results. Heckman has developed statistical methods of
handling selective samples in an appropriate way. He has also
proposed tools for solving closely related problems with individual
differences unobserved by the researcher; such problems are common,
e.g. when evaluating social programs or estimating how the duration
of unemployment affects chances of getting a job. Heckman is also a
leader of applied research in these areas.
Micro data often reflect discrete choice. For instance, data
regarding individuals' occupation or place of residence reflect
choices they have made among a limited number of alternatives. Prior
to McFadden's contributions, empirical studies of such choices
lacked a foundation in economic theory. Evolving from a new theory
of discrete choice, the statistical methods developed by McFadden
have transformed empirical research. His methods are readily
applicable. For example, they prevail in models of transports and
are used to evaluate changes in communication systems. Examples of
McFadden's extensive applications of his own methods include the
design of the San Francisco BART system, as well as investments in
phone service and housing for the elderly.
***
James J. Heckman (US citizen), 56, was born in Chicago, IL in
1944. Since 1995 he is the Henry Schultz Distinguished Service
Professor of Economics at the University of Chicago. http://lily.src.uchicago.edu/
Daniel L. McFadden (US citizen), 63, was born in Raleigh, NC
in 1937. Since 1990 he holds the E. Morris Cox Chair in Economics at
the University of California, Berkeley. http://emlab.berkeley.edu/users/mcfadden/index.html
The Prize amount, SEK 9 million, will be shared equally
between the Laureates.
Press Officer: Eva Krutmeijer, phone + 46 8 673 95 95, +46
709 84 66 38, evak@kva.se
11
October 2000
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