Tag Archives: Nobel Prize

In honouring Dylan, the Nobel Prize judges have made a category error

The Conversation

Jen Webb, University of Canberra

In 1920, Rudyard Kipling (Nobel Prize in Literature 1907), published The Conundrum of the Workshops. This poem about review culture features the Devil as “first, most dread” critic who responds to human creative outputs with: “it’s pretty, but is it art?”, a review that hurls the makers into confusion, rivalry and anguish. What could be worse, for an artist, than to discover that what you were making is not art after all?

Social media has taken over the Devil’s role as “most dread” reviewer, and all night the twitterverse has been alive with commentators expressing their outrage at, or rejoicing over, the decision of the Nobel Prize Committee to award the Literature prize to musician and songwriter Bob Dylan. As journalist and writer Jason Diamond tweeted: “My timeline is like watching a ‘Dylan deserved the Nobel’ vs ‘Dylan didn’t deserve the Nobel’ ping pong match.”

Much of this ping-pong commentary operates less according to the rules of evidence and argument than according to the rules of quarrel; of personal taste; of anger directed at established privilege; and of teasing Boomer nostalgia.

Billy Collins, one of the most popular poets in America, supports Dylan’s win. David Shankbone/Flickr, CC BY

On the Affirmative team we have not-a-poet Salman Rushdie tweeting that “From Orpheus to Faiz, song & poetry have been closely linked. Dylan is the brilliant inheritor of the bardic tradition”.

And there’s actual poet Billy Collins, who affirms the prize because Dylan’s lyrics are “in the 2 percent club of songwriters whose lyrics are interesting on the page”.

From the team for the Negative, there’s editor Chloe Angyal: “Literally zero women were awarded Nobels this year. Maybe someone can write a poignant, gravelly, somewhat atonal folk song about that”.

Or the writer Shay Stewart Bouley who tweeted about “peak white man music.” Or music journalist Everett True, who pokes fun at the committee: “Bob Dylan winning a Nobel Prize for Literature is like your third-rate English teacher at school, trying to look ‘cool’.”

Not all commentators have relied on personal taste or social politics: several observe something that struck me too: there seems to have been a category error in the awarding of this prize.

Novelist Jodi Picoult tweets: “I’m happy for Bob Dylan. #ButDoesThisMeanICanWinAGrammy?” From novelist Joanne Harris: “Is this the first time that a back catalogue of song lyrics has been judged eligible for a literary prize?” More bluntly, from novelist Jeff VanderMeer:

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Is it possible that this award was determined according to the sort of logic set out by The Logician in Ionesco’s Rhinoceros: The Nobel Prize in Literature is awarded only to those who have created literature. Bob Dylan was awarded the Prize. Therefore Dylan is a creator of literature?

Perhaps. I am very interested in the relationship between song lyrics and poetry, and it is a close relationship – the first poems were almost certainly sung – but centuries ago, the two creative modes parted company. They operate now according to a different logic, depend on different traditions, and are located within very different ecosystems. This is not a question of relative quality; it is a question of categories.

So, whether I admire Dylan’s body of work or not, whether I am a fan or not, I think the Nobel Prize Committee has made a category mistake. They awarded the prize to Dylan “for having created new poetic expressions within the great American song tradition”.

Why not Patti Smith?
Alessandro Garofalo/Reuters

And I don’t argue with this at all. But does that mean his output is “work in the field of literature”? Not for my money. Dylan is a musician; he has been well recognised for his contributions to music, and more broadly to cultural life.

When Swedish Academy member Per Wastberg gushes that “He is probably the greatest living poet”, I can only say that Mr Wastberg should not be let anywhere near a literature prize.

And – taking my own place on the team for the Negative – if it must go to a songwriter, why Dylan? Did he need the money more than, say, Patti Smith or Joni Mitchell or Aretha Franklin? Has he not had enough public attention? And were there really no writers – no poets, novelists, essayists, no people who have spent their lives in the field of literature – considered Nobel-worthy?

It’s very good to see that literature can still spark passion and outpourings of personal commentary; but I can’t help but read this decision as one that was discourteous to members of the field of literature, dismissive of women’s achievements, and fundamentally kinda nostalgic. Let me leave the last (tongue-in-cheek) word to writer Leah Kaminsky: “No woman wins any Nobel prize this year. Oh the times they ain’t a changin’.”

The ConversationJen Webb, Director of the Centre for Creative and Cultural Research, University of Canberra

This article was originally published on The Conversation. (Reblogged by permission). Read the original article.

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Explainer: what is contract theory and why it deserved a Nobel Prize

The Conversation

Hongyi Li, UNSW Australia and Anton Kolotilin, UNSW Australia

The Nobel Memorial Prize in Economic Science has just been awarded to Oliver Hart and Bengt Holmström for building the foundations of contract theory.

Contract theory is not merely the study of legally binding contracts. Broadly defined, it studies the design of formal and informal agreements that motivate people with conflicting interests to take mutually beneficial actions. Contract theory guides us in structuring arrangements between employers and employees, shareholders and chief executives, and companies and their suppliers.

In essence, contract theory is about giving each party the right incentives or motivations to work effectively together.

Hart and Holmström have developed elegant and powerful methods that are taught to all students in economics. Their work forms the fundamental building blocks of many areas beyond economics, such as finance, law, public policy and management.

Previously, general equilibrium theory had already shown how efficient outcomes can be achieved under ideal circumstances, through detailed contractual agreements. In fact, research in this area has already led to a number of other economic science prizes (John Hicks and Kenneth Arrow, 1972; Gérard Debreu, 1983; Ronald Coase, 1991).

However, this research ignored two potential issues: informational problems and incomplete contracts. By studying these two issues, Hart and Holmström developed what has become modern contract theory. Here we examine a few of the papers that explore those problems and made substantial contributions to the field.

Holmström’s contributions

Holmström’s work focuses on informational problems in which some parties do not observe what others are doing.

Consider the problem of motivating an employee to work hard. If the employer can perfectly monitor the employee, then she can simply reward the employee if he works, and punish him if he shirks. However, such monitoring is often unrealistic. Often, employers can base employee rewards only on the outcome of the employee’s work.

Holmström’s 1979 paper, “Moral Hazard and Observability”, shows how employers should optimally link employee rewards to performance outcomes. One key insight is that a CEO’s pay should not depend only on his or her company’s share price. Such a scheme would unnecessarily penalize the CEO for factors beyond his or her control, such as commodity prices.

A better reward scheme would seek to eliminate such factors by, for example, linking the CEO’s pay to the company’s share price relative to competitors in the same industry.

Another paper, published in 1982 and titled “Moral Hazard in Teams”, extends his 1979 analysis to settings in which a team of employees contributes individual efforts towards a collective output, such as a team of inventors working together to develop a new product.

A partnership scheme that simply shares profits amongst team members creates a free-rider problem: Each team member is insufficiently motivated by his or her share of profits and thus exerts too little effort. Holmström shows that the free-rider problem can be resolved by introducing a “budget-breaker”, a third party such as a venture capitalist who assigns rewards and penalties to the team members and keeps what is left for herself.

Holmström’s 1991 paper with Paul Milgrom, “Multitask Principal Agent Analyses – Incentive Contracts, Asset Ownership and Job Design”, considers situations in which the employee allocates effort amongst multiple tasks. The employer only observes the outcome of some tasks. For example, a teacher may devote effort towards improving test scores or towards inculcating student creativity.

One insight is that the school should not make teacher pay too sensitive to observable outcomes. Rewarding teachers for high test scores may distort teacher effort away from hard-to-measure tasks such as developing student creativity.

Hart’s contributions

Hart, for his part, developed foundations for the theory of incomplete contracts.

The basic idea is that it is impossible to write a contract that anticipates every potentially relevant future contingency. Consequently, the allocation of control rights becomes a powerful tool for creating incentives. This perspective enables the analysis of fundamental questions such as whether companies should outsource or integrate production, which assets they should own and how they should choose between equity and debt financing.

Hart’s 1986 paper with Sanford Grossman, “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration”, studies incomplete contracting in which various parties invest to increase the productivity of an asset. When unforeseen contingencies arise, the parties have to bargain over what to do.

Crucially, asset owners have stronger bargaining power, which motivates them to invest. Therefore, the asset should be owned by the party whose investment is most important.

A paper Hart published in 1990 with John Moore, “Property Rights and the Nature of the Firm”, extends his 1986 analysis to study optimal ownership of multiple assets. It shows that highly synergistic assets – whose values are enhanced when used together – should be owned by a single party, rather than separately by multiple parties.

Concentrating bargaining power in the hands of one party is more effective than diffusing bargaining power across multiple parties. This paper paints a compelling picture of large integrated firms where all physical and intellectual assets are owned by a single corporate entity.

From theory to real-world application

We have merely highlighted a few of Holmström’s and Hart’s fundamental contributions to contract theory.

These economists as well as others have applied this work to study key features of real-world contractual agreements: liquidity provision by governments and banks, long-term compensation and promotion schemes for senior managers and executives, and public versus private ownership of institutions such as prisons and utilities.

Contracts have governed the workings of the economy since ancient times. As technology improves and organizations become more complex, the theory and practice of contract design will only increase in importance.

As such, we owe a great debt to Holmström and Hart for giving us powerful tools to structure effective contracts.

The ConversationHongyi Li, Lecturer in Economics, UNSW Australia and Anton Kolotilin, Senior Lecturer, UNSW Australia

This article was originally published on The Conversation. (Reblogged by permission). Read the original article.

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Brian Schmidt on amateur climate science ‘experts’

Brian Paul Schmidt AC, FRS, FAA (born February 24, 1967) is a Distinguished Professor, Australian Research Council Laureate Fellow and astrophysicist at The Australian National University‘s Mount Stromlo Observatory and Research School of Astronomy and Astrophysics; and is known for his research in using supernovae as cosmological probes. He currently holds an Australia Research Council Federation Fellowship and was elected a Fellow of the Royal Society (FRS) in 2012. Schmidt shared both the 2006 Shaw Prize in Astronomy and the 2011 Nobel Prize in Physics with Saul Perlmutter and Adam Riess for providing evidence that the expansion of the universe is accelerating, making him the only Montana-born Nobel laureate. In June 2015, his appointment as the next Vice-Chancellor of the Australian National University, commencing in January 2016, was announced.

‘As a Nobel Prize winner, I travel the world meeting all kinds of people. Most of the policy, business and political leaders I meet immediately apologise for their lack of knowledge of science. Except when it comes to climate science. Whenever this subject comes up, it never ceases to amaze me how each person I meet suddenly becomes an expert.

Facts are then bandied to fit an argument for or against climate change, and on all sides, misconceptions abound. The confusion is not surprising – climate science is a very broad and complicated subject with experts working on different aspects of it worldwide. No single person knows everything about climate change. And for the average punter, it’s hard to keep up with all the latest research and what it means.

More surprising is the supreme confidence that non-experts (scientists and non-scientists alike) have in their own understanding of the subject.’

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