October 9, 2002
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Nobel Prize Awarded to Cato Adjunct Scholar
Vernon L. Smith, defender of free markets and deregulation
WASHINGTON — The Cato Institute is pleased to learn that one of its distinguished adjunct scholars, Vernon L. Smith, has been awarded the 2002 Nobel Prize in Economic Science. (Cato Institute Senior Fellow James M. Buchanan won the prize in 1986.)
Vernon L. Smith, professor of Economics and Law at George Mason University, won the prize “for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms,” said the Royal Swedish Academy of Sciences. Smith is regarded as the “Father of Experimental Economics.” As Cato’s Peter VanDoren, editor of Regulation magazine, which has published Smith’s work, explained:
“Before Vernon Smith, economists relied on blackboard theories or after‐the‐fact data analysis. Smith pioneered a third way: the use of experiments that gave us hard data about hypothetical situations. Take, for example, electricity markets. Economists who talk about electricity deregulation usually get into shouting matches. Rather than shouting, Smith conducted experiments using people to represent various electricity decision‐makers, and he tested to see how a deregulated market would operate. If deregulators had set up electricity markets like Smith set up his experiments, we probably could have avoided crises like the one in California last year.”
In addition to being a Cato adjunct scholar and contributor to Regulation, Prof. Smith has written for Cato Policy Analysis and the Cato Journal, where he serves on the editorial board. His most recent article, “Using Experiments to Inform the Privatization/Deregulation Movement in Electricity,” is in the winter 2002 edition of the Cato Journal. Prof. Smith is also a Fellow of the Mercatus Center in Arlington, Va.
“We are thrilled that Professor Smith is receiving recognition for his pioneering research by the Royal Swedish Academy of Sciences,” said Richard Pollock, vice president of communications at the Cato Institute. “As an adjunct scholar at the Cato Institute he has displayed his lifelong commitment to rigorous and innovative economic scholarship. Further, an underlying theme of Professor Smith’s work is his dedication to economic liberty, free markets and public choice. He is truly one of America’s economists who do not live in an ivory tower, but is a champion of the real world need for economic freedom. We congratulate him, George Mason University, and the Mercatus Center for today’s announcement by the Nobel committee.”
A partial list of Vernon L. Smith’s work published by the Cato Institute:
“Using Experiments to Inform the Privatization/Deregulation Movement in Electricity,” from Cato Journal.
“How and Why to Privatize Federal Lands,” a Cato Policy Analysis.
“Turning Off the Lights,” from Regulation Magazine.
“Regulatory Reform in the Electric Power Industry,” from Regulation Magazine.
“LEMS and Rents,” from Regulation Magazine.
“Reflections on Human Action After 50 Years,” from Cato Journal.