The Nobel Prize is an interesting event. The recipients go from being venerated by a few hundred or thousand of their peers to being celebrities. For the rest of their life they're often introduced as a "Nobel Prizewinner", their opinion is sought by media & the famous, etc.
Well, maybe. But the social context of physics is that people think a _lot_ about this in advance. So, yes, I'm aware of a lot of the people who missed out because they died, and while nominations aren't exactly public, there's a lot of gossip. The committee does a good job.
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Certainly, citations simply _aren't_ a good measure. It's pretty standard on hiring committees to have discussions of highly-cited duds, and low-cited gems. Citations are certainly _interesting_ to consider, but high (or low) citation in itself means nothing.
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Citations are better simply because they are reasonably correlated with underlying merit and they are not a almost zero-information binary measure. If you draw a sample of 10k scientists, you will hardly ever get a single Nobelist; their citation-counts will still be useful.
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