ST. LOUIS – When Professor Philip H. Dybvig went to sleep Sunday night, he turned on his phone’s “Do Not Disturb” setting. When the professor woke on the morning of Oct. 10, Dybvig saw he had, in his words, “a gazillion messages” on his phone.
“Somebody had said a couple days before that this is the day (of the Nobel Prize announcements), so I’m going, ‘Did I get a Nobel Prize?'” he said. “And my initial thought was it’s more likely is that I got some prank calls.”
Dybvig, a professor of Banking and Finance at Washington University’s Olin School of Business, went online and looked up the Nobel Prize winners on the organization’s website. And that is how the 67-year-old learned he was one of three recipients of the Sveriges Riksbank Prize in Economic Sciences.
Dybvig won “for research on banks and financial crises,” along with colleague Douglas Diamond and former Federal Reserve Chairman Ben Bernanke. In 1983, Dybvig and Diamond penned “Bank Runs, Deposit Insurance, and Liquidity,” and introduced a model of explaining instability of banks with “long-maturity assets and short-maturity liabilities.”
Over nearly four decades, the ideas in this paper have been used by regulators and cited by academics. It is the “go-to” paper to understand a financial crisis.
Nobel Prizes carry a cash award of $10 million Swedish kronor (nearly $900,000) and will be handed out on Dec. 10. Dybvig said he will to travel to Stockholm, Sweden, to accept the honor.
“I think the main value of the prize is in the recognition,” he said, noting that the money made from potential speaking engagements and the like would be more useful for someone younger.
As for his share of the prize money, Dybvig will likely spend the money on his family.
Information from the Associated Press was used in this report.