Gyroscopic Investing

Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandson of Ludvig Nobel.[23] Nobel criticizes the awarding institution of misusing his family's name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics.[24]

According to Samuel Brittan of the Financial Times, both former Swedish minister of finance Kjell-Olof Feldt and Gunnar Myrdal wanted the prize abolished, saying "Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman)."[21]

In his speech at the 1974 Nobel Banquet Friedrich Hayek stated that if he had been consulted whether to establish a Nobel Prize in economics he would "have decidedly advised against it"[21][25] primarily because "the Nobel Prize confers on an individual an authority which in economics no man ought to possess... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."[25]

Critics cite the apparent snub of Joan Robinson as evidence of the Committee's bias towards mainstream economics,[26][27] though heterodox economists like Friedrich Hayek (Austrian School) and Ronald Coase (associated with New institutional economics) have won.

Milton Friedman was awarded the 1976 prize in part for his work on monetarism. Awarding the prize to Friedman caused international protests by the left,[28] Friedman was accused of supporting the military dictatorship in Chile, because of the relation of economists of the University of Chicago to Pinochet and a controversial six-day trip[29] he took to Chile during March 1975 (less than two years after the coup which deposed the democratically elected president Salvador Allende). Friedman himself answered, that he never was an adviser of the dictatorship, only gave some lectures and seminars on inflation and met with many officials including the dictator Augusto Pinochet in Chile.[30] Four Nobel Prize laureates – George Wald, Linus Pauling, David Baltimore and Salvador Luria – wrote letters to the New York Times protesting the award in October 1976.[31][32]

The 1994 prize to John Forbes Nash caused controversy within the prize's selection committee because of his history of mental illness and alleged anti-Semitism.[33] The controversy resulted in a change to the rules governing the committee during 1994. Previously, members of the Economics Prize Committee members did not have any limit to their term of service; they now serve for three years.[20]

The 2005 prize to Robert Aumann was criticized by European press due to his alleged use of his research of game theory to justify his stance against the dismantling of Israeli settlements from occupied territories.[34]