Nobel Foundation slashes prize size amid crisis

"At its meeting on June 11, 2012, the board of directors of the Nobel Foundation set the amount of the 2012 Nobel Prizes at 8.0 million Swedish kronor (900,800 euros, $1.13 million) per prize," the foundation said in a statement.

That meant it was effectively lowering the prize sum from the 10 million kronor that has been given for each award since 2001, the statement added.

The move was "a necessary measure in order to avoid an undermining of its capital in a long-term perspective", said the statement.

The Stockholm-based foundation administers the prestigious Nobel Prizes for Medicine, Physics, Chemistry, Literature, Peace and Economics.

Foundation chief Lars Heikensten told AFP that the decision had been a difficult one to make.

But he stressed that "there is a lot of turbulence in financial markets, a crisis, and there is also reason to believe that we may have a number of quite difficult years ahead.

"We think it is wise to act now before it is too late."

The Nobel Prizes are paid for from money left behind in prize creator Alfred Nobel's will.

Heikensten said that while the foundation aimed to keep its expenses below the return it received on investments, for the past decade it had not managed to do so.

"Now, we're living in a time when it is difficult to get as good a return on investments as we did earlier," he said, pointing out that the foundation had raised the prize sum after the 1990s had given them good yields.

In 2000, each prize was worth 9.0 million kronor, and since 1994 the prize has never dipped below 7.0 million, according to the TT news agency.

Corrected for inflation, the new prize amount of 8.0 million lies at the same level as the prize money when the prestigious awards were first handed out in 1901 -- which was 150,782 kronor at the time, Heikensten acknowledged.

The foundation's ambition in the long term was to raise the prize amount, he said, but he stressed that it was important "not to be complacent" in light of the raging eurozone crisis.

"It is important to make sure that we can continue handing out these prizes going forward as well," he said. He did not think lowering the prize sum would undermine the award's intrinsic value.

"The value lies first and foremost in the fact that this is such a unique prize," he said.

"When we get to the autumn (when the prizes are announced), I'm certain that the winners will be very, very happy regardless."