Brancaccio: Now Paul Romer, at New York University's business school now, he also thinks a lot about how you factor in the benefits of technology.
In their separate ways, the work of Nordhaus and of Romer shares an interest in what drives economic growth and how to respond when unregulated market forces fail to deliver desired results.
Nobel committee chair Per Stromberg told Reuters Monday's award was honoring research into "two big global questions": how to deal with the negative effects of growth on the climate and "to make sure that this economic growth leaves prosperity for everyone".
Nordhaus, 77, who has been called "the father of climate-change economics", developed models that suggest how governments can combat global warming. "I hope the prize today could help everyone see that humans are capable of awesome accomplishments".
This year's laureates were announced as the United Nations issued a stark warning on the growing threat of climate change, adding pressure on policy makers and business leaders to do more to address the risks.
Many economists have since endorsed the taxing of carbon.
Romer stressed the importance of facts and science in pushing progress forward, saying in the press conference that science is the most important thing that humans have ever invented. Stern said ideas are different from a lot of other goods because they don't get used up. Examples include subsidies for research and development and patent policies that strike a balance between allowing inventors to profit from their ideas and allowing others to put the innovations to work.
The scientists who prepared the UN-backed report "are trying to convince us all that there is an imminent crisis when in fact there is a potential long-term problem, " said Myron Ebell of the Competitive Enterprise Institute, who worked on the Trump transition.
Governments have the power to promote or discourage innovation through policy.
Past year it was awarded to the behavioural economist Richard Thaler, who won for his work on nudge theory, the idea that small "nudges" can influence our economic and social behaviour, and his work around humans being irrational economic actors.
The prize wrapped up the 2018 awards season in which the most highly-anticipated prize, that for peace, went to Yazidi women's campaigner Nadia Murad, a former Islamic State sex slave, and Congolese doctor Denis Mukwege, who helps women recover from the violence and trauma of sexual abuse and rape in war.
The native of Albuquerque, NM, completed his bachelor's and master's degrees at Yale and received his Ph.D.in economics from MIT.
Paul Romer of New York University said that on Monday morning "I didn't answer either because I thought it was a spam call".
Romer is on leave from NYU and joined NYU Stern in 2010.
Prior to his work, macroeconomic research emphasised technological innovation as the primary driver of economic growth, but had not modelled how economic decisions and market conditions determine the creation of new technologies.
"I am optimistic that the (U.N. -backed) report will make a difference, but I just think we're going to have to get a little distance from where we are right now in the politics, " said Gilbert Metcalf, an economist at Tufts University and author of an upcoming book advocating a carbon tax.