American trio celebrate Nobel success

Stockholm, Sweden: American economists Leonid Hurwicz, Eric Maskin and Roger Myerson won the 2007 Nobel for economics yesterday for laying the foundations of an economic theory that determines when markets are working effectively.

Hurwicz, a Russian-born American citizen, is at 90-years-old the oldest-ever recipient of a Nobel prize.

The Royal Swedish Acad-emy of Sciences said the three established "mechanism design theory", which looks at how well different institutions fare in allocating resources and whether government intervention is needed.

Hurwicz initiated the theory and it was further developed by Maskin of Princeton University and Myerson of the University of Chicago, the academy's citation said.

Hurwicz, born in Moscow in the year of the Russian revolution, is a professor emeritus of economics at the University of Minnesota in Minneapolis.

The economists will share a prize of 10 million Swedish crowns (Dh5.7 million).

Maskin, reached by telephone at his home in New Jersey, said he was overwhelmed by the news.

Thrill

"I'm completely delighted. It's a thrill to be in their company," he told Reuters, referring to other economists who had won the coveted prize. "But it hasn't really registered yet. I'm still so befuddled by the news."

Maskin, whose son has a disability, said he planned to donate some of his award to the Camphill Foundation, which works with people who suffer from a disability.

"My wife and I have thought in the past about what would happen if we won the lottery," he said.

Hubert Fromlet, chief economist at Swedish banking giant Swedbank, said the microeconomic theories these three had developed had become increasingly popular.

"Microeconomics has gained momentum in research," he said, adding that at economic conferences it was now common to hear about decision-making processes.

"They are well-known economists within the academic field."

The academy said mechanism design theory now plays a central role in many areas of economics and parts of political science.

"Adam Smith's classical metaphor of the invisible hand refers to how the market, under ideal conditions, ensures an efficient allocation of scarce resources," the academy said.

"But in practice conditions are usually not ideal," it added. "For example, competition is not completely free, consumers are not perfectly informed and privately desirable production and consumption may generate social costs and benefits."

Eric Maskin was born in New York City in 1950 and received a doctorate in applied mathematics from Harvard in 1976.

Roger Myerson was born in Boston in 1951. Like Maskin, he finished a PhD in applied mathematics at Harvard in 1976.

Economist Leonid Hurwicz thought he was too old to win the Nobel Prize at age 90 - until his telephone began ringing yesterday morning.

"I thought that my time perhaps had passed already," the retired Russian-born US economist said in a telephone interview from his home in Minneapolis. "It's a pleasant surprise and the money for a retired person would help."

Hurwicz, the oldest recipient of a Nobel prize, won the 2007 award along with two other Americans for laying the foundations of an economic theory that determines when markets are working effectively.

However, the professor emeritus of economics at the University of Minnesota in Minneapolis said he never received a degree in the field.

"Whatever economics I learned I learned by listening and learning," he said.

Hurwicz said he has several honorary degrees, but the only degree he had when he came to the US in 1940 was a law degree from the University of Warsaw.

Born in Russia in the year of the communist revolution, Hurwicz fled to Poland with his family during the First World War.

"I left Russia before I could walk and spent my young years in high school and university in Poland," he said.

Hurwicz was in Switzerland as the Second World War broke out and did not return home, but made his way to the United States, where he worked as an assistant to economist Paul Samuelson, who himself won an economics Nobel in 1970.

"If I had been still in Warsaw in Poland, I probably would have been been one of the victims of Auschwitz," said the economist.

As for what he planned to do with the money, Hurwicz paused. "This I haven't decided yet. I want to make sure I'm really getting it."