The Nobel Memorial Prize: Economics is More Than Just Macro

Here's a piece of something I'm writing for CBS Moneywatch (for tomorrow) on the Nobel award in economcs (unedited, very rough draft):

... This year's award demonstrates something else about the economics profession. Economics is divided into two parts, macroeconomics and microeconomics. Macroeconomics is the study of entire economies, while microeconomics is the study of the individual decision making units within the economy such as individuals, households, markets, and firms.

Macroeconomic theory has come under considerable criticism lately, much of it deserved, and economics more generally has been tainted by the performance of macroeconomists and their theories prior to and during the crisis. Some aspects of the criticism apply to both macro and micro, e.g. the validity of the assumption that agents are rational, but for the most part this has not been fair to microeconomists. As this award shows, microeconomists have made many useful contributions to the world, and they have also had success in other real world applications such as auction theory. Hopefully this award will help those outside the profession understand that the world of economics is more than macro, and highlight the important contributions from the microeconomics side of the profession, contributions that matter in our everyday lives. ...

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