Americans Win Economics Nobel Prize

Wednesday, October 11th 2000, 12:00 am

By: News On 6

STOCKHOLM, Sweden (AP) â€” Two American professors who developed ways to analyze how people make basic lifestyle decisions such as how much to work and where to live were awarded the Nobel Prize in economics on Wednesday.

Theories developed by James J. Heckman, 56, of the University of Chicago, and Daniel L. McFadden, 63, of the University of California at Berkeley have contributed greatly to employment training programs and transportation and communication systems, according to the citation from the Royal Swedish Academy of Sciences. The academy cited the two for their work in microeconometrics, which combines both economics and statistics.

The men will split the prize, which is worth $915,000 this year.

Heckman is best known for labor force studies that focus on how various groups, such as married women, decide when to work and how much.

``Heckman's work is a good example of integrating theory and practice, especially when planning policy within the labor market,'' academy member Joergen Weibull said. ``His studies showed how education affects wages, and he suggested models for use when planning employment programs which are still being used today when governments plan policy.''

McFadden's models aim at determining how people will choose from different alternatives when deciding where to live, how to travel and what to buy. His work was instrumental in the design of the San Francisco BART commuter train system as well as investments in phone service and housing for the elderly, the academy said.

``The train stations are in the right places. There are sufficient parking spaces for vehicles, and people perceive the prices to be right,'' said Karl-Gustav Joereskog, a member of the academy.

McFadden, a native of Raleigh, N.C., said he was delighted that his work was recognized.

``What I did in working with that theory was to develop models to figure out a way to study what one might call 'life's big choice.' Like the choice of occupation, when to get married and how many children to have,'' he told The Associated Press.

McFadden also was recognized for methods used to evaluate the total damage of the 1989 oil spill from the Exxon Valdez tanker off the Alaskan coast and its effects on society.

``The economics community is just a few thousand,'' he said of the award. ``I guess one always figures you have a one in a thousand chance.''

Heckman, who was on a trip to the Brazilian capital Rio de Janeiro, could not immediately be reached for comment at the hotel where he was staying.

``I have been a big fan of Heckman for quite awhile,'' said Anders Bjoerklund, an economics professor at Stockholm University. ``One of his major applications is the evaluation of labor market programs ... to train unemployed people to get a job and to earn more than they would have otherwise.''

The Nobel Memorial Prize in Economics â€” the fourth in a week of awards â€” was not one of the original prizes established in Alfred Nobel's will. It was created in 1968 to mark the tricentennial of Sweden's central bank.

Canadian economist Robert A. Mundell won last year's economics prize for his innovative analysis of exchange rates, which helped lay the intellectual groundwork for Europe's common currency.

This year, the academy has focused on discoveries applicable to everyday life instead of hypothetical questions in picking its winners.

On Tuesday, the Nobel Prizes in physics and chemistry were won by six scientists who helped bring about the Information Revolution. Their work spurred on development of ever-smaller and faster personal computers, pocket calculators, cell phones, CD players, lifelike TV screens and Gameboys.

The physics prize went to Jack Kilby, who invented the integrated circuit at Texas Instruments in 1958, and two physicists whose work contributed to satellite and cell phone technology: Herbert Kroemer of the University of California-Santa Barbara and Zhores Alferov of the A.F. Ioffe Physico-Technico Institute in St. Petersburg, Russia.

The chemistry prize went to Alan Heeger, 64, of the University of California-Santa Barbara, Alan MacDiarmid, 73, of the University of Pennsylvania and Hideki Shirakawa, 64, of the University of Tsukuba in Japan.

The three modified plastics so they can conduct electricity; the pioneering work with ``brilliant plastics'' could someday lead to computers as small and light as a wristwatch.

This year's medicine prize went to Arvid Carlsson of Sweden and Americans Paul Greengard and Eric Kandel for discoveries about how messages are transmitted between brain cells, leading to treatments of Parkinson's disease and depression.

Carlsson, 77, a professor emiritus of the University of Goteborg in Sweden, Greengard, 74, of Rockefeller University in New York and Kandel, 70, an Austrian-born U.S. citizen with Columbia University in New York shared the prize.

The literature award will be announced Thursday and the peace prize, the only one awarded in Oslo, Norway, will be announced Friday.

The prizes always are presented Dec. 10, the anniversary of Nobel's death in 1896.

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On the Net: http://www.nobel.se