Explained | The History of the Nobel Prize

Here's everything you need to know about the Nobel Prize, its history, and where it gets its funds from.

The Nobel Prizes 2022 will be announced starting Monday, 3 October. Every year, the Nobel Prize is awarded to individuals or organisations who have "conferred the greatest benefit to humankind" in their respective fields of work.

Since its genesis in 1901, Nobel Prizes have been awarded 609 times to 975 individuals and organisations.

Since its inception and in contemporary culture, the Nobel has been seen as the pinnacle of recognition in various fields.

The winners of the Nobel also receive prize money of 10,00,000 Swedish Krona. Across the six categories, this amounts to over 6 million US dollars every year, but the Nobel Prize isn't funded by the State or the government. So, where does the money for Nobel Prize winners come from? How are they able to pay such large sums every year?

And how long will they be able to keep going?

The Origins of the Nobel Prize

The Nobel is awarded for excellence in the fields of literature, medicine or physiology, physics, chemistry, and peace.

You've probably heard the story before, but for completeness, let's go over it quickly.

The origins of the Nobel Prize are as interesting, if not more so, than the annual awards themselves. The Nobel dates back to the late 19th century, to Alfred Nobel.

Nobel was a scientist, a chemist, and an inventor. Over the course of his life, he made a fortune from his 355 inventions and patents. A large number of his inventions were arms, ammunition, or explosives, but he was most famous for inventing dynamite.

According to a 2007 report in TIME magazine, after the death of Alfred's brother Ludvig in 1888, several newspapers accidentally printed Alfred Nobel's obituary instead of Ludvig's, with the title 'Le marchand de la mort est mort' which translates to 'The Merchant of Death Is Dead.'

The obituary allegedly went on to say, "Dr Alfred Nobel, who became rich by finding ways to kill more people faster than ever before, died yesterday." The obituary reportedly opened Alfred's eyes to his legacy and how he would be remembered after his death.

This obituary was supposedly a big influence on Nobel. He didn't want to be remembered for only creating weapons of destruction and for the lives that his inventions took.

So, 8 years after this obituary, in December 1896, when Alfred Nobel died of a cerebral haemorrhage in Italy, his detractors were astounded to find that his will left 94 percent of his assets and fortune, around 31 million SEK at the time, to be used to create prizes for people whose efforts conferred the "greatest benefit on mankind" in the fields of physics, chemistry, physiology or medicine, literature, and peace.

But it would be five years before Nobel's last will and testament would be executed.

Who Awards the Nobel Prize?

Alfred Nobel's last will and testament detailed who would be tasked with giving out the Nobel for physics, chemistry, medicine, peace, and literature. An excerpt from Nobel's will states:

"The prizes for physics and chemistry are to be awarded by the Swedish Academy of Sciences; that for physiological or medical achievements by the Karolinska Institute in Stockholm; that for literature by the Academy in Stockholm; and that for champions of peace by a committee of five persons to be selected by the Norwegian Storting."

The Norwegian Storting is the supreme legislature of Norway, which was established in 1814. It awards the Nobel Peace Prize.

In 1968, Sweden’s central bank, the Sveriges Riksbank, established The Sveriges Riksbank Prize in economic sciences in memory of Alfred Nobel. The bank awards the prize for economic sciences every year.

To this day, the awards are still given out by these bodies.

The executors of Alfred Nobel's will, Ragnar Sohlman and Rudolf Lilljequist, created the Nobel Foundation to oversee Nobel's fortune and the awarding of prizes every year.

The foundation consists of a board of five Swedish or Norwegian citizens, with its seat in Stockholm. The chairman of the board is appointed by the Swedish King in Council, with the other four members appointed by the trustees of the institutions which award the prizes.

However, since 1995, all members of the Nobel Foundation are selected by the trustees of the institutions.

Where Does the Money for Nobel Prize Winners and the Foundation Come From?

Now, this is a question that's come up more than once in the past. Nobel's fortune, with all its assets and properties, was valued at 31 million Swedish Krona (SEK) in 1896.

The Nobel Prize has been awarded over 609 times to 975 winners. Each prize includes a 10,00,000 SEK prize money, so where does the money for Nobel winners come from? Investments, of course.

According to a 2019 article in Norwegian newspaper Dagens Nyheter, the Nobel foundation's capital is split three ways – with 50 percent invested in shares, 30 percent invested in investments, and 20 percent in bonds.

The total value of funds owned by the foundation is estimated to be over 3.6 billion SEK or just over 560 million US Dollars.

A chunk of the investments that the committee makes are in American and European stocks. Starting from 1953, the Nobel Foundation was allowed to invest in shares as well. Since then, the foundation's funds have grown steadily, according to a 2009 report in German newspaper Handelsblatt.

While the prize money received by winners varies from year to year, based on the falling or rising exchange rate of the Swedish Krona, overall it remains at 10 million SEK, which in 2022 would amount to just over 900,000 USD.

How Does the Nobel Foundation Decide the Laureates?

Nominees for the Nobel are called laureates. The Nobel Committee sends nomination forms to over 3,000 people in September the year before the prize is awarded. These people are usually renowned academics or experts in their relevant fields.

They send back the nomination forms before 31 January, which is the deadline for form submissions.

For the peace prize, the nomination forms are sent to former laureates and governments to send their submissions.

The submission forms for peace prize nominees are also sent to former members of the Norwegian Nobel Committee, the same body that decides the peace prize winner.

Once the Nobel Committee receives the nomination forms, it filters them down and selects around 300 names to consider for the prize.

The names are then sent back to the respective institutions for a final decision on the winners. The names of the other nominees are sealed and not to be revealed till 50 years after the award.

Read our full coverage of the 2022 Nobel Prize awardees here.