There has been a debate in the literature that economics is not a precise or exact science as physics and chemistry are and, therefore, does not deserve the status of a Nobel Prize.

This argument is rather hollow, because the Nobel Prize has also been instituted in the fields of Literature and Peace.

In fact, the third and last will of Alfred Nobel (1833-1896), signed on November 27, 1895 clearly states that the prize should be distributed to those who “have conferred the greatest benefit on mankind”.

And economics certainly qualifies on that criterion, be it encouraging international trade, stabilising exchange rates, targeting inflation, addressing malnutrition or extending social banking for financial inclusion.

The pioneering work by Simon Kuznets on development, Wassily Leontief on input-output methods, and Robert Solow on growth, are some splendid specific examples of contribution of economics to human welfare.

Alfred Nobel was a great innovator, entrepreneur and businessman with enterprises in different parts of the world.

Therefore, understandably, logically, Sveriges Riksbank, on the occasion of its tercentenary celebrations, funded the economics prize, which is awarded by the same Royal Swedish Academy of Sciences, Stockholm, following the same principles as the other Nobel prizes.

So far, 74 laureates over the last 45 years have been awarded the prize since 1969, mainly in the areas of macroeconomics, microeconomics and econometrics.

The Royal Academy gives a wider interpretation to the term economic sciences and, therefore, several awards have been given for contributions on borderline areas between economics and political science, sociology, history, law, management, psychology and philosophy. Some research areas that have been neglected so far are poverty, unemployment, inequality and environment.

The Nobel Prize has accorded economics a type of recognition, standardisation and professionalisation that helps the subject to attract the best talent in the world. And many a budding economists in graduate courses dream to excel in their profession to win a Nobel and immortalise their research.

The purpose of any prize is to recognise a body of work, incentivise the recipient and encourage others to attain excellence in their areas of research.

The recipients get an opportunity to showcase their research to other professionals and policymakers, to attract bright talent to their areas of interest, and fund more research.

Rather, given the vast scope of economics in terms of application of its research for the welfare of mankind, and the fact that such prestigious awards can spur research, there could be two prizes every year — one for developing and the other for developed countries, as they are starkly different.

(The author is RBI Chair Professor of Economics, IIM Bangalore. The views are personal.)

Read also: Should the Economics Nobel be done away with?: Yes

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