Hall and Woodford Win Nobel Economics Prize for Stabilization Work
Robert Hall of Stanford and Michael Woodford of Columbia won the 2026 Nobel Prize in Economic Sciences for rebuilding stabilization models around the choices of households and firms. The prize is worth 12 million Swedish crowns.
Key points
- STOCKHOLM: Two American professors won the 2026 Nobel Prize in Economic Sciences on Monday, October 12, for work that rebuilt how governments and central banks think about saving an economy in…
- The prize is worth 12 million Swedish crowns, about 1.2 million dollars.
- Older models treated the economy as a set of big dials: inflation, output, jobs.
STOCKHOLM: Two American professors won the 2026 Nobel Prize in Economic Sciences on Monday, October 12, for work that rebuilt how governments and central banks think about saving an economy in trouble. Robert E. Hall of Stanford University and Michael Woodford of Columbia University share the prize, the Royal Swedish Academy of Sciences said. The formal citation honors them for the microeconomic foundations of macroeconomic stabilisation.
The prize is worth 12 million Swedish crowns, about 1.2 million dollars. Hall and Woodford receive about 6 million crowns each, roughly 598,000 dollars each. The award is the last Nobel of the year. It is formally the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Sweden's central bank created it in 1968, and it was first awarded in 1969. It is not one of the five prizes in Alfred Nobel's 1895 will.
What they actually did
Older models treated the economy as a set of big dials: inflation, output, jobs. Hall and Woodford rebuilt the models from the ground up, starting with the millions of choices that households and firms make every day. Their key point sounds simple and changed a lot. People look ahead. A family deciding whether to spend or save, and a firm deciding what price to set, both act on what they expect next. So a central bank does not just move interest rates. It shapes expectations, and expectations move the economy.
Hall's early work showed that consumers try to keep their spending steady over time rather than lurch with each paycheck. Woodford built that thinking into the framework now known as New Keynesian economics. Central banks around the world now run versions of these models when they set policy.
John Hassler, chair of the prize committee, said the work leaves policymakers better equipped to deal with shocks such as energy crises or sudden changes in household spending. Woodford told a news conference that officials should not treat stabilisation as pulling levers on a machine that ignores what people understand, and that clear statements about the future path of interest rates became a key policy tool after the 2008 financial crisis.
Why it matters now
The timing is hard to miss. Central banks are again working through an energy shock, this one driven by the Iran war and attacks on Gulf shipping, with oil above 100 dollars and US Treasury yields at levels not seen in decades. The models Hall and Woodford built are the ones officials reach for in exactly this kind of week, when inflation risk and recession risk pull in opposite directions.
Hall was born in Palo Alto, California, in 1943 and teaches at Stanford. Woodford was born in Chicopee, Massachusetts, in 1955 and teaches at Columbia. The two did not work as a team. They pushed the same idea forward from different sides, and the academy honored the combined result.
Last year's prize went to Joel Mokyr, Philippe Aghion and Peter Howitt for work on how new technology and creative destruction raise living standards. Most winners of the economics prize have come from the United States. Only three women have won it, most recently Claudia Goldin in 2023.
What happens next
Hall and Woodford receive their medals in Stockholm on December 10, the anniversary of Alfred Nobel's death, alongside this year's winners in medicine, physics, chemistry, literature and peace. The economics prize closes the 2026 Nobel season.