Pair from CMU win nobel prize for economics
PITTSBURGH — More than 30 years ago, Edward C. Prescott advised Finn E. Kydland on his doctorate at Carnegie Mellon University — forming a partnership that eventually would turn the world of economics on its head.
On Monday, Prescott and Kydland, an economics professor at Carnegie Mellon and Fox Chapel resident, won the 2004 Nobel Prize in economics. They become the fifth and sixth current or former faculty members from CMU’s Tepper School of Business to win the coveted award.
“For a small school of our size, it’s an unparalleled intellectual achievement,” said Ilker Baybars, deputy dean of the Tepper School. “It’s immense visibility not only for Carnegie Mellon but for our hometown because the news is all over the world, and western Pennsylvania these days needs some good news.”
Monday’s announcement means Pittsburgh institutions have won a Nobel trifecta.
Wangari Maathai, a University of Pittsburgh alumna from Kenya, won the Nobel Peace Prize on Friday.
Kydland, 60, and Prescott, 63, an economics professor at Arizona State University, received their doctorates from what is now the Tepper School. They will share the $1.36 million prize, and each will receive a gold medal and diploma on Dec. 10 in Stockholm.
Kydland, a Norwegian native, is on a leave of absence from the University of California at Santa Barbara, where he is a visiting professor, and currently is in Norway.
Kydland called the award “fantastic” during an interview with Norwegian public radio station NRK, saying it’s “the ultimate recognition” for an economist.
He was teaching at the Norwegian School of Economics and Business Administration when an assistant interrupted a lecture to inform him he had won the prize, said Torsten Persson, chairman of the prize committee.
“I didn’t want to end the lecture,” Kydland told NRK. “The students clapped when I told them why we had to cancel.”
Prescott taught at Carnegie Mellon between 1971 and 1975 and chaired Kydland’s dissertation committee.
“Finn doesn’t make a mistake,” Prescott said. “I make mistakes. Finn is steady. He can go 20 hours a day. I go in fits and starts.”
In announcing the award, the Nobel Committee of the Swedish Royal Academy of Sciences in Stockholm cited their research on the consistency of government economic policy and the driving forces behind business cycles.
Prescott and Kydland contended that fluctuations on the supply side, such as technological advances, could change business cycles, and that the government should not necessarily tamper with the economy.
Their approach upset the widely accepted view that policy-makers should intervene to smooth over business cycles.
On campus, Kydland is known as a quiet, unassuming man dedicated to his research.
Off campus, he streaks around in black leather on his yellow Italian Ducati — the Ferrari of motorcycles.
He regularly visits Moondog’s in Blawnox to listen to the blues — especially Glenn Pavone and the Cyclones, his favorite local band.
“I have known Finn at a party to pick up a drum and play along if people are singing,” said Zin, his friend and colleague.
After work on Fridays, Kydland leads a group of four to 40 faculty and students to Silky’s Sports Bar and Grill and the Squirrel Hill Cafe, both in Squirrel Hill. There he drinks Yuenglings or Penn Pilsners and discusses the events of the week, including office and professional politics, and sports.
Kydland is a Steelers fan and as a doctoral student living in Squirrel Hill, he enjoyed attending Pirates games at Forbes Field.
He still plays soccer and skis.
Back in workshops and seminars, though, Kydland will stop colleagues cold by asking what they call “the question question.”
“Finn will stop us by saying, ‘That’s all very interesting, but what is the question you’re trying to answer with all this?'” Zin said.
“‘Be focused. Just don’t wander off because it’s fun.'”