Professors win Nobel prize

But when the callers telephoned his home again, Sims had an inkling that it might be the folks from the Nobel Foundation.

“If it was a prank, it was a pretty good Swedish accent,” his wife told him.

It turned out that Sims and visiting economics professor Thomas Sargent were not, in fact, victims of a practical joke. On Monday morning, the long-time friends and intellectual counterweights were awarded the 2011 Nobel Memorial Prize in Economic Sciences in Memory of Alfred Nobel for “their empirical research on cause and effect in the macroeconomy,” the Royal Swedish Academy of Sciences, which awards the Nobel Prizes, announced.

The two Nobel Laureates have pioneered a new data-centered approach to economic thinking that uses statistics and modeling to improve decision-making under uncertainty. Sims and Sargent question rational expectations and believe that a quantitative analysis of history can shed light on how individuals and countries truly make — and should make — decisions.

Joined at a press conference in Richardson Auditorium on Monday afternoon by University Provost Christopher Eisgruber ’83, chair of the economics department and Wilson School professor Mark Watson; Dean of the Faculty David Dobkin; University Vice President and Secretary Bob Durkee ’69; and New York University President John Sexton, Sims and Sargent explained that the Nobel Prize was more of a victory for the field than it was for either of them individually. The two professors heaped praise on colleagues, former graduate students and universities for their contributions.

“It is, I think, good for modern macroeconomics — quantitatively based — that the Nobel Prize gives public attention to our approach,” Sims said.

This empirical approach, Sargent explained, offers great promise to policymakers. By combing through and understanding past trends, he said, they can build new models that improve the economic world.

“We don’t know everything but that doesn’t mean we know nothing,” he said, describing himself and Sims as “statistical historians.”

“Building statistical models that incorporate [public policy] is a noble enterprise, and it’s all we have to understand and improve the world and economics,” he said.

United by field, divided by stance

Though the pair of economists conducted their research separately, the two have been in dialogue about statistical macroeconomic issues for decades, regularly commenting on drafts of each other’s publications and debating economic issues with their graduate students and mentees. While their opinions sometimes differ, a shared passion for their subfield has ultimately trumped any academic disagreements, they said.

Throughout the press conference, the professors shared stories of their tough-minded, yet warm, academic relationship.

Get the best of the ‘Prince’ delivered straight to your inbox. Subscribe now »

“I couldn’t be happier to be getting this prize, especially to be getting it with Tom, who I’ve known for a long time,” Sims said. “We’ve had a series of continuing arguments, many of which are still going on as I slowly persuade him of the error of his earlier positions.”

Sargent agreed that he often failed to find common ground with his fellow winner.

“Chris is extremely generous in commenting on papers … they start like this: ‘This paper is deeply flawed,’ ” he said to laughter from the audience. He added that another professor in the field once told Sargent, “With friends like you, Chris doesn’t need enemies.”

Watson, who has observed the relationship between Sims and Sargent over the years, said that while they have a strong friendship, they are very tough scholars.

“When they disagree on a lot, they discuss it in very tough terms, critically, without losing their friendship,” he said. “They don’t take this stuff personally, but they take the ideas very seriously.”

The two economists first became acquainted as graduate students at Harvard in the late 1960s. They continued their relationship as faculty members at the University of Minnesota, where they wrote their only co-authored paper.

Sims left the University of Minnesota in 1990 and then spent nine years at Yale before coming to Princeton. Sargent left Minnesota a year later for brief teaching stints at the University of Chicago and Stanford before coming to NYU in 2002. He has spent the fall semester at the University as a visiting professor for many years. Sims and Sargent are currently co-teaching a graduate seminar on advanced macroeconomic theory for the fall semester.

This year marks the first time that two University professors have shared the Nobel Prize in Economics. They are the seventh and eighth Princeton faculty members to win the award in the 21st century, most notably following Wilson School professor Paul Krugman’s award in 2008.

Christina Paxson, Dean of the Wilson School, said that she wasn’t surprised that the University fared so well in recent years.

“We have a great economics department,” she said. “You pick good people and this kind of thing happens.”

Watson agreed that their win did not come as a surprise. “I think for the last 15 years, you’d see Sargent’s and Sims’ names in the top 10 regularly [in winner predictions],” he said. “It was certainly only a matter of time for these great scholars.”

Laureates in the classroom

After receiving the early morning phone call, Sims had little time to celebrate — he had to get to precept. So on Monday morning at 10 a.m. — less than three hours after the call from the Texas area code — Sims walked in to his classroom to teach ECO 342: Money and Banking. Forty minutes later, Sargent headed into Fisher Hall for Macroeconomic Theory I.

Erick Walsh ’13, one of the students in Sims’ precept, said that students immediately congratulated the newly minted Laureate. But rather than saying thank you, the professor moved along as planned, only stopping to apologize for the photographer that accompanied him that morning.

“You can really tell that he is more interested in people … than in him showing off,” Walsh explained. “But he had a huge smile on his face this morning. You could tell that he was really happy — he deserved it.”

Sims, however, said that Monday morning’s class wasn’t that much different than usual.

“The precept has six students registered — five showed up. There wasn’t much fanfare,” he noted.

Sam Tang ’13, one of those five students, said that all the students entered the classroom Monday morning knew their professor’s new status — and showed it with their feet.

“It was a 10 a.m. precept and never before have students come five minutes early,” he said.