By Christopher Matthews

The media coverage of this year’s Nobel Prize in economics was dominated by the concept of the “efficient market hypothesis,” which is narrowly defined as the idea that markets will quickly assimilate all public information about a stock. One of this year’s Nobelists, Eugene Fama, won his award for providing the empirical basis to support this view, while another Robert Shiller, was recognized for poking holes in the theory and providing evidence that markets reflect more than just the available information about a security, but the irrational emotions of human beings as well.

Reaction to the award was predictable, with liberal commentators lauding Shillers work, which supports the idea that government regulation can improve the functioning of financial markets, and conservatives praising Fama, whose work shows the power and intelligence of markets, and questions the ability of any one person or government to exceed their wisdom.

But a third economist — Lars Peter Hansen — was also recognized this year, though his work received less attention because it could not be distilled to support one political ideology or another. TIME spoke with Hansen to get his opinion on the state of economics and how this social science has affected public policy and vise-versa…

…Another policy concern that should be almost dominated by uncertainty is climate change. The truth is our knowledge of climate change impacts remains rather sparse. That doesn’t mean we shouldn’t act. It may be prudent to act now because it’ll be more costly to act later, but it’s critical to recognize that we’re designing policies based on limited knowledge. In political debates that’s often stuck in the background.

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