Award-winning: Lloyd Shapley, left, and Alvin Roth have been rewarded for their “outstanding” economic engineering. *AFP Photo
Award-winning: Lloyd Shapley, left, and Alvin Roth have been rewarded for their “outstanding” economic engineering. *AFP Photo

WEDNESDAY, OCT. 17: Speed dating and the Nobel prize for economics aren’t two subjects that usually have a lot in common – until now.

People who opt for the quick-fire and modern way of finding a partner may be interested to know the inspiration for the system was based on the work of two men — an economist and a mathematician — who this week were honoured for their ground-breaking work.

According to various sources, in the 1960’s Lloyd Shapley, with colleague David Gale, helped devise a theory to match supply and demand in markets with ethical and legal complications — markets that would not work if just left to economics — like admitting students to public schools in the US.

Around that time Shapley also wrote a paper trying to answer the question of how individuals in a group of people could be paired up when they all had different views on their ideal partner.

This work was later developed by Alvin Roth, who applied it to other areas, such as matching kidney donors with patients.

Shapley, 89, a professor emeritus at University of California Los Angeles, and Roth, 60, a professor at Harvard currently guest lecturing at Stanford University, will share the $1.2m annual prize awarded by the Royal Swedish Academy of Sciences and were praised for ensuring economic agents found the right match in a market where price was not the sole deciding factor.

Shapley and Gale’s theory aimed to ensure the best solution for both sides or as the Academy explained: “An allocation where no individuals perceive any gains from further trade is called stable.”

Applied to matching up men and women in their search for partners, the theory involved either the men or the women choosing the partner they liked the best. Each man, for example, was then given a list of the women who picked him out, and he would select his top choice from the list. Those women left without a match after the first round would have a second round to choose from the men they had  initially turned down. Shapley and Gale proved mathematically that this process led to a stable match, where no couple sees any gain in swapping partners. The modern version of this is, of course, speed dating.

To prove this works mathematically is more complex than it sounds. Years later Roth ran with the theory and did a series of studies, applying it to other subjects. One of the results was the founding of the New England Programme for Kidney Exchange in 2005 and the matching of donors. The work has saved lives.

The Academy committee explained: “Even though these two researchers worked independently of one another, the combination of Shapley’s basic theory and Roth’s empirical investigations, experiments and practical design has generated a flourishing field of research and improved the performance of many markets.”

It added the prize was for “an outstanding example of economic engineering”. Roth admitted it would take some time to get his head around the award. Speaking at a news conference in Sweden by phone, reported him as saying: “It sheds a very bright spotlight on the work we do, so that’s a good thing.

“My colleagues and I work in an area that we’re calling market design, which is sort of a newish area of economics and I’m sure that when I go to class this morning my students will pay more attention. He added he plans to carry on lecturing: “But I imagine that they’ll be listening with renewed interest,” he said.

Shapley is the son of renowned astronomer Harlow and was part of a four-man team that invented the board game So Long Sucker in 1950.