A few weeks ago the Swedish Academy awarded 2015 Nobel Prize in Economics to Angus Deaton for his analysis of consumption, poverty, and welfare. As soon as I heard the word ‘consumption’, I became emotionally engaged because I had studied Retail and Consumer Sciences. In its press release, the Academy highlighted that we must first understand individual consumption choices and link detailed individual choices and aggregate outcomes to be able to design economic policies for the better. As far as I understood, Deaton’s microeconomics research was vastly overlapping with the field of retailing. Actually, I might argue that consumer choice / behavior was more central and preferential to retailing than economics.
WHAT IS RETAILING, ANYWAY?
The domain of retailing can be defined in relation to end users. Any business activity or research question either directly dealing with or indirectly linked to the individual consumers constitutes the subject of retailing. In addition to consumer behavior and basic operational issues including inventory, merchandising, and selling, retailing scholars deal with such topics as branding, internationalization, customer experience, and innovation among others.
In practice, for such purposes as taxing, licensing, or monitoring, some organizations conveniently limit their (retailer) classification to ‘businesses operating in shops and malls’. However, from an academic perspective, retailers include all those serving individuals regardless of the location and industry (i.e., restaurants, hotels, hospitals, and online retailers).
IS THE NOBEL PRIZE IN ECONOMICS LIMITED TO ECONOMISTS?
In the past, most prizes were related to macroeconomics themes, namely inflation and unemployment. Then, microeconomics started to make significant contribution. Let’s refer to the Academy’s FAQ page for a moment:
How do you define Economic Sciences?
We try to give it a broad definition – i.e. in principle anything that is of interest to economists, even if the research is done within other academic disciplines.
Can you choose anyone for the Prize in Economic Sciences? Political scientists, etc.?
Yes. For example, Elinor Ostrom, who received the prize in 2009 was a political scientist and Daniel Kahneman (2002) is a psychologist.
Do you think the definition of Economic Sciences will change? How?
I am not sure the definition of Economic Sciences will change so much in the future, but it is quite possible that a larger fraction of future economic research will be influenced by other fields like political science, sociology and psychology, and even by the natural sciences.
I understand that what counts is to enrich our understanding of economy and to enable making impact on human life. Since scientific research has become more multi-disciplinary, inter-functional, and cross-industry over the years, this is only possible with contributions from other disciplines. In most cases, external perspectives may even be more substantial. Then, we can assume more ‘outsiders’ to be awarded in the future.
The economic developments in the last decade, underlining a more democratized trade world, have put forward individuals both as providers and consumers of the value. Some of the major themes emerged have been sharing economy, collaborative consumption, peer-to-peer economy, disruptive innovation, micro entrepreneurship, and maker movement, all of which are among the main concerns of retailing. So, those ‘outsiders’ are likely to be retail scientists in the upcoming years.
IMPACTFUL RETAILING RESEARCH WILL MAKE IT HAPPEN
While I was reading the biographies of the previous Nobel laureates in economics, two profiles were immediately attracted to me. One of them was Herbert A. Simon, a management scientist born in 1916. He said “The social sciences, I thought, needed the same kind of rigor and the same mathematical underpinnings that had made the ‘hard’ sciences so brilliantly successful.” So, he worked for the ‘hardening’ of the social sciences so that they will be better equipped for their difficult research tasks. Simon even studied graduate-level physics to be able to achieve his goal. In result, as an outsider, his devotion brought him the Nobel in 1978.
The other one was Gary S. Becker, the Nobel laureate in 1992. He won the prize because he extended the domain of economic theory to aspects of human behavior which had previously been dealt with by other social science disciplines such as sociology and demography. Apparently, there were not many outsiders like Herbert A. Simon dedicated to conducting rigorous and impactful research linked to economics. So, economists had to expand their areas of interest to cover all the relevant dimensions of their research.
Research questions as well as potential areas of academic involvement were always obvious to all parties. These two figures approached the same ecosystem from different angles with different perspectives but with the same level of robust methodologies and hardwork. In the end, both of them were acknowledged for their contributions that stood the test of time.
I predict the future of economics is strongly tied to retailing whether it is studied by economists or others. Retailing researchers have a greater chance to win Nobel if they take the lead in their very own field and follow rigorous research procedures.