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Edward C. Prescott's Speech at the Nobel Banquet

Edward C. Prescott - Senior Monetary Advisor

Published May 1, 2005  |  May 2005 issue

Stockholm City Hall
December 10, 2004

Edward C. Prescott Your Majesties, Your Royal Highnesses, Ladies and Gentlemen,

One of the great joys of research—whether it be in economics, physics, chemistry or any academic discipline—is the act of discovery, those moments when we are surprised by what we have found ... when our original ideas are turned upside down, and we suddenly have to rearrange how we view the world.

This is precisely what happened to Finn and me when we were working on the two papers for which we have received this award. We were operating on previously held assumptions—just doing what we always had done and expecting similar results, when theory suddenly slapped us in the face and commanded us to pay attention. After the initial shock, we humbly said, "Yes, Master," and we promptly changed our views.

You would think that we would have learned something from those experiences, but it happened to us again ... on three additional occasions! And each time it was immensely gratifying.

It is typical at events such as this to acknowledge the people who have influenced you and who have laid the foundation for your work, but there are far too many names and too little time to do justice to such a list. However, Finn, a Norwegian, said it would be okay if I mention the Swedes, who continue to have more than their fair share of people advancing the economic science. There is one Swede in particular, the great Knut Wicksell, whose work 100 years ago still has a major influence on how we conduct our science. And just to keep Finn happy, I suppose I should mention one of the many marvelous Norwegian economists—Ragnar Frisch, who did so much to advance Wicksell's work.

But the people I would really like to acknowledge and celebrate are the students. They may not realize it now, but they are making history with their research and they will be the future Nobel Laureates. Their sense of wonder is a continual source of inspiration and never fails to energize me.

Some of those students will stand in this beautiful banquet hall some day and tell their own stories about how theory knocked some sense into them. I know it has knocked a lot of sense into me, and I look forward to many more such surprise discoveries.

Thank you very much.

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