New York University’s Thomas J. Sargent and Princeton University’s Christopher A. Sims shared the 2011 Nobel Prize in Economic Sciences for their work in exploring cause and effect in economic policy.

The two, both aged 68, will share the 10 million-krona ($1.48 million) prize that comes with the award, the Royal Swedish Academy of Sciences, which selects the winner, said today in Stockholm.

Sargent’s research has centered around the rational expectations hypothesis, which assumes people exploit available information and base their expectations on constantly updated and reinterpreted information. Sims is known for his application of vector auto-regression in predicting economic outcomes.

“The methods that I’ve used and Thomas developed are central to finding our way out of this mess” that the global economy is in, Sims said in an interview with Swedish broadcaster SVT, after the award was announced.

Sargent received his bachelor’s degree from the University of California at Berkeley in 1964, winning the medal as the university’s most distinguished scholar the same year. He obtained his Ph.D. at Harvard University in March 1968 and is the Berkley Professor of Business and Economics at New York University.