17 October 2012

Nobel Prize for Economics

This year's "Nobel Prize for Economics" (see footnote) went to Alvin Roth and Lloyd Shapley. They studied ways to design markets that efficiently match up agents according to their preferences. Medical students like myself are indebted to these two economists for their hand in setting up and refining "the Match," the process whereby medical students are assigned to residency programs.

Medical students apply to residency programs and then rank, in order, their list of preferences. Residency programs also submit a ranked list of their preferences among applicants. Sometime in the spring, a computer processes the preferences and assigns students to programs.

The algorithm used is quite elegant and favors student preferences to the greatest extent possible. It is always to a student's advantage to rank his choices according to his actual preferences. Roth even helped refine the Match to allow couples to match jointly.

It's cool how the application of economic theory has made the lives of medical students like myself less stressful. Now, if only the process of getting into medical school had been that straightforward.

Historical footnote: Alfred Nobel endowed in his will an annual set of prizes to be awarded "for outstanding achievements in physics, chemistry, medicine, literature, and for work in peace." The prize for economics was set up many decades later by a Swedish bank, but it is still considered a "Nobel Prize."