According to the foundation, the cut was made to ensure that the prize money lasts into the future as well.
"The Nobel Foundation is responsible for ensuring that the prize sum can be maintained at a high level in the long term. We have made the assessment that it is important to implement necessary measures in good time," read a press release from the Nobel Foundation's executive director, Lars Heikensten.
He told TT that the new prize sum, about $US 1,1 million, should not lower the prestige of the prize, which has been awarded since 1901.
"Lowering the prize sum isn't satisfying, but given the way the world looks I believe it is a wise decision. It has been raised and lowered before."