ABSTRACT
In October 1998 the Royal Swedish Academy of Science shocked many people when it awarded the Nobel Prize in Economic Science to Amartya Sen. The very next day an op-ed article in the Wall Street Journal complained that the award was given to an “establishment leftist” with “muddleheaded views” (Pollack, 1998). Further griping about the selection of Sen soon appeared elsewhere (Richman, 1998). Some commentators even hinted that Sen really did not deserve a Nobel Prize, but was chosen because the Swedish Academy was embarrassed by Myron Scholes and Robert Merton, its 1997 choices (Coy, 1998). (Scholes and Merton were the brains behind Long-Term Capital Management, a hedge fund that nearly brought down the US financial system in the Fall of 1998; see Lowenstein, 2000.) Selecting Sen, who has emphasized the interrelationships between economics and ethics, it was argued, became a sort of Nobel penance for the evils perpetrated by Scholes and Merton.
