But had they, the 1974 winner of the Nobel Prize, and the author of The Use of Knowledge in Society, wouldn't have been as astonished as he would to read this from the 2012 announcement of the award to Alvin Roth and Lloyd Shapley;
This year's prize is awarded for an outstanding example of economic engineering.Since Hayek wrote;
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.He believed that economics was decidedly not about engineering.
[This just in, thanks to a Senior Adviser to HSIB;]
Turns out, that Alvin Roth has designed the mathematical formula that Boston and NY City use to allow their students to select (and be accepted by) schools in which they actually want to enroll.
...students’ rankings and schools’ priorities are loaded into computers. Students are then matched to their first-choice schools. If the schools are filled with higher-priority students, the unmatched students are moved by the computers to the pool for their second-choice schools. But, because all seat allocations under the [Roth, and] Gale-[Lloyd] Shapley model are temporary, the second choices of unmatched students are compared to the schools’ first-choice matches. The computers then reshuffle the assignments to the schools to give seats to students who have listed the schools as their second choice, if those students rank higher in the citywide priority lists than students who have selected the schools as their first choices. These bumped students are then added to the pools of their secondchoice selections.
This process continues until student choices are completely exhausted or all schools are full. Only then are the matches finalized and sent out to students. Because it’s centralized and computerized, the entire process takes only a few minutes once students’ preferences and schools’ priorities are entered.A Nobel prize for school choice.