He taught at the University of Chicago, the University of Rochester, the University of California Berkeley and Stanford University before working at New York University.
Far from developing policies to reduce climate change, President Donald Trump has argued that the threat of human-produced climate change is a hoax concocted by China to hurt the American economy. Their findings have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge.
Nordhaus has argued that climate change should be considered a "global public good", like public health and worldwide trade, and regulated accordingly, but not through a command-and-control approach.
Nordhaus was born in Albuquerque, New Mexico. Carbon dioxide, which is emitted when fossil fuels are burned, is a heat-trapping "greenhouse gas" blamed for global warming, and a tax would make polluters pay for the costs imposed on society.
Paul Romer's research, on the other hand, shows "how the accumulation of ideas sustains long-term economic growth".
Romer's work suggests that to achieve the innovation needed to meet the climate change goals, regulation is needed. In 1990, he published his work which is the foundation of what is now called Endogenous Growth Theory.
Romer's career has also taken him outside the academic world.
Fellow Nobel economics Laureate Paul Krugman told the New York Times in 2013 that too much of it involved "making assumptions about how unmeasurable things affected other unmeasurable things".
Monday's award of the last of the 2018 Nobels also took place less than a month after the 10th anniversary of the collapse of investment bank Lehman Brothers.
That triggered an economic crisis from which the world's financial system is arguably still recovering.
The prize is given to an economist who has made a substantial contribution toward the subject, with an award of 9 million Swedish kroner ($US990,000) split between the pair.
The US duo was awarded the 2018 Nobel Prize in Economic Sciences for developing new methods that serve for the welfare of the world's population and provides long-term sustainable growth in the global economy.
There was no literature prize this year after the Swedish Academy made a decision to take a pause following a sexual assault scandal.
George Alessandria, the chair of Rochester's Department of Economics, says the members of the department are thrilled that Romer is being recognized with the Nobel Prize.