Of lemons and rejections

Tim Harford has a little piece in the FT today on George Akerlof and his insights regarding markets for used cars.

Apart from explaining Akerlof's nobel prize winning contributions he also describes his difficulties in getting his work published ...

used cars were just the beginning for Akerlof. His neat little paper was turned down by two top journals because they couldn't see past the trivia of his example. He recalls that a third, the Journal of Political Economy, had a better reason for rejecting him: the paper couldn't be true, because if it was true then economics would be turned on its head.

The Journal of Political Economy was half right. Akerlof did turn economics on its head - and eventually received the Nobel Prize for doing so - not by documenting the travails of used-car buyers and sellers, but by showing how corrosive a little bit of inside information can be to all sorts of markets. Insurance, including health insurance, is one possible casualty.

Akerlof's problems in getting published were not isolated. George Shepherd and I wrote an account of the problems that faced many economists who would eventually win the Nobel prize [see "How Have the Mighty Fallen," Journal of Economic Perspectives, 1994]. George published a book of letters that we received from many famous economists. I also recounted how we came to write that paper in my edited volume, Publishing Economics (Edward Elgar, 2000). Finally, here is another account of another Nobel prize winner -- Robert Lucas.