Three American scientists won the 2013 economics Nobel prize on Monday for research that has
improved the forecasting of asset prices in the long term and helped the emergence of index funds in stock markets, the award-giving body said.
"There is no way to predict the price of stocks and bonds over the next few days or weeks," The Royal Swedish Academy of Sciences said in awarding the 8 million crown ($1.25 million) prize to Eugene Fama, Lars Peter Hansen and Robert Shiller.
"But it is quite possible to foresee the broad course of these prices over longer periods, such as the next three to five years. These findings ... were made and analyzed by this year's Laureates," the academy said.
Shiller helped create a closely watched gauge of US housing prices and in June this year warned of a potentially new housing bubble in some of America's largest cities.
Fama, tipped as a Nobel winner for many years, has been called the father of modern finance and is well-known for research showing that certain groups of stocks tend to outperform over time.
The behaviour of asset prices are key to decisions such as savings, house buying and national economic policy, the academy said.
"Mispricing of assets may contribute to financial crises and, as the recent global recession illustrates, such crises can damage the overall economy," it added.
Fama and Hansen are professors at the University of Chicago, while Shiller is a professor at Yale University.
"A lot of people had told me they hoped I would win it, but I am aware that there are so many other worthy people that I had discounted it, so I would say no, I did not expect it," Schiller told a news conference.
The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.
Some facts about the Nobel prize for economics
Here is a look at the 2013 Nobel Prize for economics, which was awarded on Monday jointly to
Americans Eugene Fama, Lars Peter Hansen and Robert Shiller "for their empirical analysis of asset prices".
* Fama, Hansen, and Shiller developed new methods for studying asset prices and used them in their investigations of detailed data on the prices of stocks, bonds and other assets. Their methods have become standard tools in academic research, and their insights provide guidance for the development of theory as well as for professional investment practice.
* In 1968, the Sveriges Riksbank - Sweden's central bank - established the prize in memory of Alfred Nobel. It is not one of the five awards set out in the dynamite tycoon's will. The prize is worth 8 million crowns ($1.25 million).
* Since 1969, 45 prizes have been awarded to 74 laureates; Ragnar Frisch from Norway and Dutchman Jan Tinbergen were the first. Of the 44 prizes, 22 were given to one laureate only.
* The oldest laureate in Economic Sciences to date is Leonid Hurwicz, who was 90 when he won the 2007 prize. He is also the oldest Laureate to be awarded a prize in any of the categories. Elinor Ostrom is the only female winner of the Economics prize so far, in 2009.
Physiology or Medicine:
James Rothman (United States)
Randy Schekman (United States)
Thomas C Suedhof (Germany, United States)
For - plotting how cells transfer vital materials such as hormones and brain chemicals to other cells, giving insight into diseases such as Alzheimer's, autism and diabetes.
Francois Englert (Belgium)
Peter Higgs (United Kingdom)
For - predicting the existence of the Higgs boson particle that explains how elementary matter attained the mass to form stars and planets.
Martin Karplus (United States, Austria)
Michael Levitt (United States, United Kingdom)
Arieh Warshel (United States, Israel)
For - laying the foundations for development of computers to understand complex chemical processes from the purification of exhaust fumes to photosynthesis, which helps in complex processes such as the development of drugs.
Alice Munro (Canada)
For - being a master of the contemporary short story. Munro is acclaimed for her finely tuned storytelling, which is characterised by clarity and psychological realism. Some critics consider her a Canadian Chekhov.
Organisation for the Prohibition of Chemical Weapons (OPCW)
For - its extensive efforts to eliminate chemical weapons.
Eugene Fama (United States)
Lars Peter Hansen (United States)
Robert Shiller (United States)
For - their empirical analysis of asset prices.