Should the Nobel Folks Be Sued for the Financial Crisis?
The recent financial crisis clearly had many contributing villains. But if you’re looking to sue someone to recover losses,?Nassim Nicholas Taleb maintains, the choice is clear: the Swedish Central Bank, which awards the Nobel Prize in Economics*:
Taleb said that the Nobel Prize for Economics has conferred legitimacy on risk models that caused investors’ losses and taxpayer-funded bailouts. … Taleb singled out the Nobel award to Harry Markowitz, Merton Miller and William Sharpe in 1990 for their work on portfolio theory and asset-pricing models.
“People are using Sharpe theory that vastly underestimates the risks they’re taking and overexposes them to equities,” Taleb said. “I’m not blaming them for coming up with the idea, but I’m blaming the Nobel for giving them legitimacy. No one would have taken Markowitz seriously without the Nobel stamp.” …
“People used the theory and assigned numerical forecasts to the algebra,” said Sharpe, a professor of finance, emeritus, at the Graduate School of Business at Stanford University, in a telephone interview. “But I’m not going to take the blame for the numbers they put in.”
If Taleb were to actually sue, and were to be even close to successful (neither of which seems remotely possible), can you imagine the crowd who’d line up to sue the Nobel Committee for its Peace Prize? (HT: Ravin R. Pierre)
*Technically not a Nobel Prize like those in chemistry, physics, and literature, but the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel