An assistant professor of economics at the U of R from 1982 to 1986, Paul Romer, became the 12th Rochester Nobelist for his work studying a pressing issue facing the global economy: how to deal with pollution and climate change and how to foster the innovation needed to tackle such problems.

A former University of Rochester assistant professor won the Nobel Prize in economics on Monday for studying a pressing issue facing the global economy: how to deal with pollution and climate change and how to foster the innovation needed to tackle such problems.

Paul Romer, a former assistant professor of economics at the U of R and currently a professor at New York University, and William Nordhaus of Yale University were named winners of the $1.01 million prize by the Royal Swedish Academy of Sciences.

Romer's work "explains how ideas are different to other goods and require specific conditions to thrive in a market," the academy said. Romer's work found that unregulated economies will produce technological change, but insufficiently provide research and development; this can be addressed by government interventions such and R&D subsidies.

Nordhaus in the 1990s became the first person to create a model that "describes the global interplay between the economy and the climate," the academy said. Working separately from Romer, he showed that "the most efficient remedy for problems caused by greenhouse gases is a global scheme of universally imposed carbon taxes."

Carbon taxes are fees imposed on companies that burn carbon-based fuels such as coal and oil. Advocates see the taxes as encouraging companies to use less-polluting fuels.

"Many people think that dealing with protecting the environment will be so costly and so hard that they just want to ignore the problem," Romer said by telephone to the Swedish Academy. "I hope the prize today could help everyone see that humans are capable of amazing accomplishments when we set about trying to do something."

An assistant professor of economics at the U of R from 1982 to 1986, Romer went on to appointments at the University of Chicago, the University of California at Berkeley, and Stanford University before his appointment at NYU’s Stern School of Business. He earned his PhD from the University of Chicago in 1983.

The 12th Rochester Nobelist, Romer is the third 2018 laureate with ties to Rochester. Also among the 2018 laureates were Donna Strickland, who received her doctorate in optics from Rochester in 1989 and is now a professor at the University of Waterloo in Ontario, and Gérard Mourou, a former engineering professor and scientist at LLE and currently a professor at the École Polytechnique in France. They were awarded a share of the 2018 Nobel Prize in Physics.