Two economists win Nobel for insights on setting pay and rewards

[Eugene]

Source: Reuters

British-born Oliver Hart and Finland's Bengt Holmstrom won the Nobel Economics Prize on Monday for work that addresses a host of questions from how best to reward executives to whether schools and prisons should be privately owned.

Their findings on contract theory have implications for corporate governance, bankruptcy legislation and political constitutions, among other fields, said the Royal Swedish Academy of Sciences, which announced the 8 million Swedish crown ($928,000) prize.

"This theory has really been incredibly important, not just for economics, but also for other social sciences," said Per Stromberg, member of the prize committee and professor at the Stockholm School of Economics.

Contract theory considers, for example, whether managers should get paid bonuses or stock options, or whether teachers or healthcare workers should be paid fixed rates or by performance-based criteria.

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Read more: http://www.reuters.com/article/us-nobel-prize-economics-idUSKCN12A0ZB

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WORLD NEWS | Mon Oct 10, 2016 | 7:59am EDT
By Daniel Dickson and Niklas Pollard | STOCKHOLM

[Odin2005]

1. There is no such thing as a "Nobel Economics Prize".

It is a prize invented by Swedish banksters "in honor of Alfred Nobel" in the 1960s in order to legitimize right-wing hacks like Hayek and Friedman and justify attacks on Scandinavian social democracy, it is not a true Nobel Prize.

[Festivito]

2. Hear here!

Oh that disastrous Chicago school of economics!

[ronnie624]

3. +1

An 'economist' is nothing but an acolyte of the orthodoxy, anyway. Their blabbering always reveals a brutish ignorance of human nature and the fundamental principles of science.

[Dreamer Tatum]

4. I always thought Stiglitz and Krugman were RW hacks

thanks for confirming that.

[Odin2005]

5. The prize "moderated" after it served it's purpose of legitimizing the Chicago and Austrian schools.

Look at a list of recipients, almost all the early ones were RW hacks.

[Dreamer Tatum]

6. Yeah, first they had to give it to that hack Gerard Debreu?

You might try learning something before you bleat.

[Yavin4]

7. Paying people in stocks is dangerous.

Executives will then start managing the stock price instead of the company. That opens up all kinds of shady shit.

It's similar to using standardized tests in education. People start teaching the tests instead of the subject.

[TexasBushwhacker]

9. I agree

Of course if you have an executive with some ethics, they will lead the company to be profitable without things like pay cuts, massive layoffs, sending jobs overseas etc.

[Hortensis]

8. But this is terrific. These theories blast right-wing ideologies

and practices that sacking of nations by business are based on. They provide good concrete bases for formulation of policies that benefit the general welfare, even including the wealthy, who also do better in prosperous stable nations.

What's wrong with performance-based executive salaries? And I oppose the privatization of functions that are the duty of society, so formulas for performance-based contracts are not exactly bad news. If private companies can't do it better than government for less, isn't that good for them and us to know?

Just more signs that the wheel has been turning.