While people often think of economists as cold-hearted business types who only care about money the real story of leading economic thinkers is much more rounded. The 2018 Nobel prize in the field of economics went to Paul Romer and William Nordhaus, two thinkers who are concerned with a great deal more than the next cycle of profits. Their work is actually focused on the long-term end products of the economy, especially as they impact the earth itself.
An issue with all of the social sciences is dealing with things that are hard to quantify. This is especially true in economics, where thinkers are often pressured to focus on profits and expenses while ignoring the larger picture. Still, the greatest economic thinkers have always been the ones who have been able to break out of the box and put the economy in a larger context.
For Romer and Nordhaus this means looking at how economics can think about human knowledge and the health of the planet. While this might seem slightly “pie in the sky” for people, who are mainly interested in earning as much money as possible the team of Romer and Nordhaus would point out that these factors actually have a huge impact on the earning potential of businesses and individuals.
Our current economy wouldn’t exist if humanity wasn’t able to develop the knowledge-base that it currently has. It can be argued that humans were able to leap so far beyond other animals because the spoken and written word have allowed us to pass our knowledge down from one generation to the next. While animals have to act on instinct and a short lifetime’s worth of experience the human can draw upon thousands of years of human advances in every field.
While knowledge is important the issue isn’t just about knowledge in the abstract, it’s about knowledge that finds its way into a place where it is encouraged. This is what Romer is focused on, looking at how certain areas seem to unleash the full potential of human knowledge while others let it go to waste.
Using our knowledge, humans have been able to reshape the world, but not every change humans have made has been for the better. This is the other half of the equation and the focus of William Nordhaus. He is focused on looking at how humans interact with the environment, and vice versa. Modern humans often think that they are above the environment, safely protected by technology. But reality shows that this isn’t the case. To this day the most prosperous nations tend to benefit from clear natural advantages, and in the coming years, people will suffer from natural disadvantages. Many of these issues will come from climate change.
People have ignored the economic costs of their actions for too long. As the temperature rises and temperature patterns change, people will be paying for humanity’s choices in cold hard cash. Economists can no longer ignore the environment and pretend that they are seeing the whole picture.
Romer and Nordhaus show us that economists need to look beyond the numbers directly in front of them if they really want to understand the economy. The modern economy is so large and far-reaching that it can’t be understood without a very wide view. It’s a good thing we have thinkers like Romer and Nordhaus to help us expand our vision.