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| American trio share Nobel economics prize for work on asset prices | American trio share Nobel economics prize for work on asset prices |
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| The Nobel committee lurched to the right on Monday after it awarded two followers of Milton Friedman's free market theories the much-coveted annual prize for economics. | The Nobel committee lurched to the right on Monday after it awarded two followers of Milton Friedman's free market theories the much-coveted annual prize for economics. |
| Eugene Fama and Lars Peter Hansen of the ultra-conservative Chicago school won the Nobel prize alongside Robert Shiller, the Yale economist famous for giving his name to the most watched house price index in the US. | Eugene Fama and Lars Peter Hansen of the ultra-conservative Chicago school won the Nobel prize alongside Robert Shiller, the Yale economist famous for giving his name to the most watched house price index in the US. |
| The Royal Swedish Academy of Sciences said it was honouring the economists for their work examining the way markets operate. They will share the 8m Swedish krona (£781,782) prize equally. | |
| The academy said the three economists were at the top of their field "for their empirical analysis of asset prices that greatly improved our understanding of how financial markets work, when they seem to work well and when they seem to work otherwise". | The academy said the three economists were at the top of their field "for their empirical analysis of asset prices that greatly improved our understanding of how financial markets work, when they seem to work well and when they seem to work otherwise". |
| Fama, 74, is notorious in leftwing circles for denying that financial bubbles exist and asserting that recessions are a largely unexplainable fixture of capitalism that should be allowed to take their course. | |
| He joined other famous disciples of Friedman, including former Federal Reserve boss Alan Greenspan, in defending the efficient-markets hypothesis that underpinned the deregulation of the banking system. | |
| In the aftermath of the banking crash, Fama blamed the US government, arguing that its policy of loosening laws restricting access to credit was at the heart of the crisis. He said the banking industry acted rationally in response to distorting incentives put in place by an interfering government. | In the aftermath of the banking crash, Fama blamed the US government, arguing that its policy of loosening laws restricting access to credit was at the heart of the crisis. He said the banking industry acted rationally in response to distorting incentives put in place by an interfering government. |
| In recent decades Fama has specialised in producing models that show the way stock markets and other asset markets work. Hansen, 60, is best known for his work modelling how economic actors cope with risk and changing environments. | In recent decades Fama has specialised in producing models that show the way stock markets and other asset markets work. Hansen, 60, is best known for his work modelling how economic actors cope with risk and changing environments. |
| Shiller, 67, has risen to prominence following a career that has seen him adapt free market theories to take on board concepts of exuberance and irrationality. Unlike Fama, who denies that it is possible to measure whether assets are overpriced, Shiller has documented how markets can fall victim to bubbles that become unsustainable. | |
| While it is hard to predict whether stock or bond prices will go up or down in the short term, it is possible to foresee movements over periods of three years or longer, the academy said. | While it is hard to predict whether stock or bond prices will go up or down in the short term, it is possible to foresee movements over periods of three years or longer, the academy said. |
| "These findings, which might seem surprising and contradictory, were made and analysed by this year's laureates," it said. | "These findings, which might seem surprising and contradictory, were made and analysed by this year's laureates," it said. |
| Americans have dominated the economics awards in recent years; the last time there were no US economists among the winners was in 1999. | Americans have dominated the economics awards in recent years; the last time there were no US economists among the winners was in 1999. |
| The Nobel committees have now announced all six of the annual awards for 2013. | |
| The economics award is not a Nobel prize in the same sense as the medicine, chemistry, physics, literature and peace prizes, which were created by Swedish industrialist Alfred Nobel in 1895. Sweden's central bank added the economics prize in 1968 as a memorial to Nobel. | The economics award is not a Nobel prize in the same sense as the medicine, chemistry, physics, literature and peace prizes, which were created by Swedish industrialist Alfred Nobel in 1895. Sweden's central bank added the economics prize in 1968 as a memorial to Nobel. |
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