Only one will remain. Who will it be? — My nominee for the Nobel prize in Economics
By: Lorena Cyann
Tags: Economics, Gender, Women, Nobel Prize

[1] Nobel prize in Economics

It’s this time of the year again. The time where everyone raises their eyes in order to see who will be the next one to receive the Holy Grail of the economic rewards: the Nobel Prize.

Last year, Paul R. Milgrom and Robert B. Wilson were awarded for their “improvement to auction theory and inventions of new auction formats”. The year before, Abhijit Banerjee, Esther Duflo and Michael Kremer were recognized for their “experimental approach to alleviating global poverty” [2]. Who will it be this time?

Many famous names may come to your mind: Andrei Shleifer, Daron Acemoglu or even Robert J. Barro. Those are undeniably few of the greatest economists of our time. Their contribution to the field of behavioral finance, political economy and new classical macroeconomics respectively improved significantly our knowledge. Still, it is not the prediction I would make.

[3] Marianne Bertrand

My forecast would be: Marianne Bertrand for her “use of psychology in behavioral economics on her studies on gender gaps”. Marianne Bertrand is a Professor of Economics at the University of Chicago Booth School of Business and a Research Fellow at the National Bureau of Economic Research, the Center for Economic Policy Research, and the Institute for the Study of Labor. As of October 2020, she is ranked among the top 5 of female economists and among the top 150 economists [4]. Very influential in the fields of labor economics, corporate finance and development economics, her research has been published in the most reputed journals including the Quarterly Journal of Economics, the Journal of Political Economy or the American Economic Review. She also received several awards comprising the Labor Economists’ Rosen Prize for Outstanding Contributions to Labor economics in 2012.

In my opinion, her contribution to labor economics stands out particularly in her study of gender gaps. At the border between economics and psychology, she opened a whole new field to explore. Her many potential explanations to the gender gap offer a clear view of how we got to this situation and many keys on how to escape it.

First, she brought up the potential of psychological and socio-psychological factors in explaining gender differences in labor market outcomes in the Handbook of Labor Economics published in 2011. Gender differences in psychological attributes have already been proved by experiments and researches. For example, in their risk attitudes or behavior towards competition. Men tend to take more risks and are likely to perform better under stress and competition. Women have faced stereotype threats during the last decennia which have shaken their confidence in tasks that have been categorized as manly tasks. This results also in differences in social preferences, ability to negotiate leading to implications for labor market outcomes.

You can find Marianne Bertrand on Youtube

What Marianne Bertrand specifically study is the impact of gender identity norms on the gender gap and on women’s well-being. Indeed, gender norms such as the fact that women should not work or should earn less than their husbands are still widely implemented. And she proved that this affects a broad range of outcomes such as the formation of marriages, marriage satisfaction and the division of household chores. At first, the decrease in gender gap in labor force participation led to a decrease in marriage rates for high-skilled women. But then, in a second step, the tendency reversed and high-skilled women have now higher marriage rates in Nordic countries principally. Still, the marriage satisfaction of women earning more than their husband is very low and to compensate women tend to invest more time in the household chores. This ultimately weighs on the couple which is more likely to get a divorce. So the decrease in wage gap did not translate into a higher satisfaction of women’s life. On the contrary, working mothers felt more stressed, tired and unhappy than stay-at-home mothers. This opened the field to more questions such as: How differentially do women and men evaluate the quality of their life in relation to their objective achievements? And did those evaluations changed over time?

More widely, Marianne Bertrand demonstrated that gender gaps were also mainly due to career interruptions and weekly hours which are both mostly due to motherhood. She also studied the determinants of CEOs salary and the disruptive behavior of men which the two could give an additional explanation for the gender gap but from the men point of view this time.

Moreover, Marianne Bertrand also brings a new insight on discrimination in general whether on gender or on race. She brought up the existence of an implicit discrimination. A discrimination that is unintentional from the employer. The implication of such a finding means that remedies could limit the amount of discrimination without forcing agents to take decision against their will. And unlike other policies, these ones could be implemented at a low cost and without making race salient which greatly increases political feasibility.

Furthermore, she has been the first to raise a new approach to poverty. For her, poverty arises because poor people have the same common bias as everyone but as they have little margin for errors that emphasize their behavior and the outcomes are worsened. If this came to be proven, simple and inexpensive policies could have a substantial impact.

You can follow @ChicagoBooth on Twitter to keep up to date with Marianne Bertrand’s research

Up to this day, Marianne Bertrand still remains active in all of these fields and publish regularly research papers. Currently, her research focuses on the effect of COVID-19 on labor market, beliefs and developing countries.

To conclude, Marianne Bertrand would be a perfect candidate for the Nobel prize thanks to her use of psychology in behavioral economics on her studies on gender gaps. Her insights brought a whole new light on the rationale of the existence of a gender gap and helped to develop policies to ensure a better integration of women in the workplace. Therefore, she deserves recognition on a grand level.