How Nobel economists spend their $1 million winnings
- Every year, researchers in economics are awarded the Nobel Prize, alongside a hefty sum in winnings.
- Some have saved up their million-dollar winnings, while others have donated it.
It turns out that it pays off to revolutionize the field of economics. All you have to do is bag a Nobel Prize.
In 2023, winners of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel were awarded 11 million Swedish krona — which translates to just over $1 million. That million-dollar jackpot was most recently awarded to Harvard professor Claudia Goldin, whose work on women's rights, equal pay, and the motherhood penalty has helped spawn a whole field of economics focused on the ways that pay gaps develop and stick around.
"There are lots of people doing such research now, and I think that this means that they'll see that it is important and that it's recognized," Goldin told Insider after her win.
Goldin joins an esteemed group of 93 laureates and now faces one of the questions that Nobel Prize-winning economists might be uniquely equipped to answer: How to spend that money.
It's a perennial question and one that some laureates across different categories have answered by splashing out on things like motorcycles or houses. Others have put it towards further research, or charitable causes. According to the Guardian, laureates usually get their prize money after the award presentation in Stockholm; many receive their prizes via a bank transfer, Lars Heikenstein, executive director of the Nobel Foundation, told the Guardian — and some want it distributed in installments across two separate tax years.
Goldin did not immediately respond to Insider's request for comment on how she intends to spend her winnings, but previous economics laureates have anecdotally seemed to follow their own research in how they think about their winnings.
Franco Modigliani, an MIT professor who nabbed the Nobel in economics in 1985, got about $225,000 in winnings. According to an MIT obituary, he spent some of that sum to upgrade his Laser-class sailboat. But, ultimately, he wanted to spend his winnings according to his own research on people's saving and spending habits.
"I will use the prize money in accordance with my own theories of how people behave — namely, distribute it over the rest of my life," Modigliani said upon receiving the prize, according to the Washington Post. "I'm not going to go on a binge. I will use it gradually. That's what my theory says people do."
Modigliani isn't alone in putting his winnings where his (research) mouth is. Elinor Ostrom, the first woman to win the prize for her research on common resources, donated her share of her $1.4 million in winnings — she won the prize alongside Oliver E. Williamson in 2009 — to the Workshop in Political Theory and Policy Analysis at Indiana University, which she cofounded with her husband, according to an obituary in the Proceedings of the National Academy of Sciences of the United States of America.
Esther Duflo, the second woman to win the prize for her work on poverty, alongside her fellow 2019 winners Abhijit Banerjee (who is also her husband) and Michael Kremer, also donated their winnings. They poured about $916,000 into the Weiss Fund for Research in Development Economics at Harvard University, which helps fund students and research into development economics, according to the Boston Globe.
Meanwhile, Sir Angus Deaton, who won the prize in 2015 for his work on poverty and inequality, told the Guardian that he had "worked on trying to understand spending and saving all of my professional life," and had learned that it "makes no sense to spend a once-and-for-all windfall." After paying "a lot" of tax on his winnings, he saved the rest and put it towards his retirement fund.
Richard Thaler, a behavioral economist and professor at the University of Chicago, won the prize for his work on how humans are, in part, irrational. So when he was asked how he'd spend what was, in 2017 dollars, around $1.1 million in winnings, Thaler told reporters: "I will try to spend it as irrationally as possible."
In a follow-up official Nobel interview, Thaler clarified that he made that comment at 4:45 a.m.
"I do not have the money yet so I have not lived up to that promise," Thaler said. "I do intend to throw a good party Saturday night and then try to spend it to make as many people happy as possible."
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