The Indicator from Planet Money
The Indicator from Planet Money

How did we get a Nobel Prize in economics?

October 13, 2026

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5 min read

How did we get a Nobel Prize in economics?

This year's Nobel Prize in Economics went to Robert Hall at Stanford University and Michael Woodford at Columbia University, recognized for what the Royal Swedish Academy of Sciences called "microeconomic foundations of macroeconomic stabilization." That phrase describes a quiet revolution in how economists understand the whole economy — and how to keep its ups and downs from feeling like a wild roller coaster. But the prize itself has a stranger origin story than most people realize, one that starts not with Alfred Nobel's will but with a Swedish central banker's 300th birthday party.

The Keynesian crisis that created new winners

The father of macroeconomics was British economist John Maynard Keynes, who believed governments could fight recessions by boosting spending and restrain inflation by pulling back. For decades, his recipes seemed to work. Then came the 1970s oil crisis, when high unemployment and high inflation struck simultaneously — something Keynesian models said shouldn't happen. The old tools failed.

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What you'll learn

  • 1 (00:00) **Nobel Prize in Economics Announced** - This year's prize went to Robert Hall and Michael Woodford for microeconomic foundations of macroeconomic stabilization.
  • 2 (01:23) **Hall and Woodford's Contribution** - They rebuilt macroeconomic models from the micro level, focusing on how people and businesses decide to spend, save, and invest based on expectations of tomorrow.
  • 3 (03:36) **The Prize's Official Name Reveals Its Origin** - The prize is actually the Swedish Central Bank Prize in Economic Sciences in Memory of Alfred Nobel.
  • 4 (04:28) **The 1960s Origin Story Begins** - The Swedish central bank, the world's oldest, is turning 300 and its governor, Per Osbrink, wants to make a big splash.
  • 5 (05:13) **The Idea for a Nobel Prize in Economics** - Osbrink initially considered funding papers or a book, but found that boring, then hit on creating a new fancy prize for leading economists.
  • 6 (06:04) **Getting the Government On Board** - Sweden's left-of-center Social Democratic government supported active government intervention in the economy, the peak of Keynesian economics.
  • 7 (06:48) **Convincing the Nobel Family** - The Nobel family did not want this prize initially.

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Show Notes

This year's Nobel Prize for Economics went to American economists Robert E. Hall and Michael Woodford! Their research focused on macroeconomic models and economic shocks.

But … How did we get a Nobel Prize in economics, or as it’s actually called, the more long-winded “Swedish Central Bank Prize in Economic Sciences in memory of Alfred Nobel”? And why did nearly 70 years pass between the first Nobel Prizes and a Nobel recognition for economics? 

Fact checking by Sierra Juarez.

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