An old joke has it that economists like to grouse that something may work in practice but does it work in theory? That comes to mind with the news that former Federal Reserve Chairman Ben Bernanke is sharing this year’s Nobel prize in economics for his research into financial crises. His insights worked in theory but not in practice.

Mr. Bernanke, Douglas Diamond and Philip Dybvig are sharing the Nobel for work adding to understanding of the relationship between banking crises and the broader economy. The assumption for much of the 20th century was that banking crises were a result of negative developments on Main Street or the farm.