U.S. Economists Garner Nobel Prizes

STOCKHOLM, Sweden--Three American pioneers in financial economics and corporate finance won the 1990 Nobel prize in economics yesterday.

It was the seventh time in 10 years that the award, given by the Swedish Academy of Sciences, has gone to Americans.

Harry Markowitz, of the City University of New York, was cited for developing the theory of portfolio choice, the academy said.

Merton H. Miller '44, of the University of Chicago, was honored for his "fundamental contributions to the theory of corporate finance."

William F. Sharpe, of Stanford University, won for his contributions to the theory of price formation for financial assets, the so-called Capital Asset Pricing Model (CAPM), the academy said.

The three will divide a $700,000 prize.

Since 1969, when the prize was first awarded, 18 of the 30 winners of the economics prize have been Americans.

"This year's laureates are pioneers in the theory of financial economics and corporate finance," said the academy.

Markowitz, 63, of Chicago made "the first pioneering contribution in the field of financial economics" in the 1950s, it said.

He developed a theory for house-holds' and firms' allocation of financial assets under uncertainty, the so-called theory of portfolio choice.

The theory analyzes how wealth can be best invested in assets which differ in their expected return and risk. It therefore helps reduce risk.

Miller, 67, of Boston, made the most important achievements in the theory of corporate finance and the evaluation of firms on markets, said the academy.

He worked initially in collaboration with 1985 economics prize-winner Franco Modigliani of the United States.

The theory explains the relation, or lack of one, between firms' capital asset structure and dividend policy on one hand, and their market value on the other.

Sharpe, 56, of Cambridge, Mass., was the leading figure among several researchers in the 1960s who used Markowitz's portfolio theory as a basis for developing a theory of price formation for financial assets, the academy said. That was the so-called Capital Asset Pricing Model (CAPM).

The economics prize is the only Nobel award established to complement the five prizes that dynamite-inventor Alfred B. Nobel created in his will at the end of last century. It was instituted in 1968 by Sweden's Central Bank.

Nobel's original prizes in physics, chemistry, medicine, peace and literature have been awarded since 1901.

The economics prize is awarded by the same body that awards Nobel's physics and chemistry prizes and follows the same guidelines, including Nobel's wish that the prize shall be awarded to those who have "conferred the greatest benefit on mankind."

The Nobel physics and chemistry prizes are to be announced today. Last week, Mexican poet and essayist Octavio Paz won the prize for literature. Two American doctors, Joseph E. Murray, a professor of surgery emeritus at Harvard Medical School, and E. Donnall Thomas, won the prize in medicine for pioneering organ and bone marrow transplants.

Soviet President Mikhail S. Gorbachev was awarded the peace prize on Monday.

The prizes are presented December 10, the anniversary of Nobel's death in 1896. The peace prize is given in Oslo, and the others in Stockholm.