James Tobin’s speech at the Nobel Banquet, December 10, 1981
Your Majesties, Your Royal Highnesses, Ladies and Gentlemen,
I thank you for my honor, and for your friendship and hospitality to me and my family. This day, this week, will live in our memory. I am gratified that scholars I greatly respect read my work and found it worthy of recognition. I am proud to join the company of the eighteen fine economists previously awarded the Prize in Economic Science in Memory of Alfred Nobel.
On the occasion of the first award in 1969, Jan Tinbergen said, “it looks as if from now on economics has become a grown-up science.” In those days economics enjoyed prestige reflected from the unparalleled prosperity, stability, and growth of the first two post-war decades. Now after a disappointing decade of “stagflation,” many critics doubt that economics is either grown-up or science. Though economists have something to do for good or ill with the performance of economics, it makes little more sense thus to score the profession than to judge meteorology by the weather.
Yet the situation has undeniably changed since 1969. On the most prominent issues of daily political economy, our profession offers counsel more divided than at any time since the 1930s, and our journals expose fundamental divisions in theory and methodology. There are several endemic reasons why these are hard to resolve, even though economics has made great progress in mathematical and statistical sophistication and has at hand more data than ever and vastly multiplied computational capacity. We cannot make controlled experiments. We cannot be sure that the structure that generates our observations is constant in time and space. And as my great teacher, Joseph Schumpeter, said, a subject so close to politics and policy inevitably blends ideology and science. The vision and energy that bring new ideas are often ideological and political, but free professional scrutiny selects the ideas deserving of survival. This process has in the past transformed conflict into stronger synthesis, and I am optimistic it will do so again.
I would like to think of the institution of this Prize not as celebration of achieved status as science but as encouragement of the scientific spirit of economic inquiry at its best.