So every 10 years or so for the past 20 years the field of Finance gets a Nobel Prize for Economics. In 1997 it was Myron Scholes and Robert Merton for creating the Black-Scholes Equation (Black had already passed away at that point). In 1990 it was Markowitz, Miller and Sharpe for CAPM, means-variance analysis, and other items in financial economics. There are a lot of people who have won that have written papers important to finance (Stiglitz and Engle jump to mind), but those two awards are for academic careers studying finance.
Smart readers will note that they were given after the models in question were already buried. CAPM lost it’s power in the early 1980s, and Fama-French disproved it in 1993. Black-Scholes won after the 1987 crash and around the same time as the LTCM disaster.
So it seems about time for another award for Finance. There’s one more to give, at least. If Fama wins, as he is a favorite to do, I am hoping he shares it with a behavioral finance researcher, especially Richard Thaler, and perhaps one of the strong empirical finance guys who have more or less broken the EMH (Andrew Lo, John Campbell, Kenneth French, etc.). I am sure Krugman/Delong’s ears will be pouring out steam (especially after his embarrassing performance as a Macro Theorist, something that makes all of us in the business school look terrible), and you could read it almost as a taunt, giving it out exactly at the moment the theory has done the most damage. But a joint-win by Fama and a behaviorist would say “There’s a lot of work to be done here, and we are looking for new answers to replace older answers that haven’t worked.”
Or at least that’s the best read I’ll give on it.