Nobel Prize in Economics Goes to Woman for First Time Ever

And she's from my home state, too! Woot!

The prize committee cited Elinor Ostrom, 76, at Indiana University, and Oliver E. Williamson, 77, at the University of California, Berkeley, for work done over long careers. Ms. Ostrom is the first woman to receive the economics prize in the 41-year history of the award. She is a political scientist, not an economist, and in honoring her, the judges seemed to suggest that economics should be thought of as an interdisciplinary field rather than a pure science governed by mathematics.

"This award is part of the merging of the social sciences," said Robert Shiller, a Yale University economist. "Economics has been too isolated and too stuck on the view that markets are efficient and self-regulating. It has derailed our thinking."

...Ms. Ostrom's work deals in the concept of "commons" shared by a number of people who earn their living from a common resource and have a stake, therefore, in preserving it. Her most recent research has focused on relatively small forests in undeveloped countries. Groups of people share the right to harvest lumber from a particular forest, and so they have a stake in making sure the forest survives.

"When local users of a forest have a long-term perspective, they are more likely to monitor each other's use of the land, developing rules for behavior," Ms. Ostrom said in an interview. "It is an area that standard market theory does not touch."

...Ms. Ostrom concluded in her research that the "tragedy of the commons" was an inaccurate concept. Particularly in 17th- and 18th-century England and Scotland, the concept described villagers' overgrazing of their herds on the village commons, thereby destroying it as pasture.

The solution often invoked was to convert the commons to private property, on the ground that self-interested owners would protect their pasture land.

"Conservatives used the tragedy of the commons to argue for property rights, and efficiency was achieved as people were thrown off the commons," said Joseph E. Stiglitz of Columbia University, a Nobel laureate in economics himself. "But the effects of throwing a lot of people out of their livelihood were enormous. What Ostrom has demonstrated is the existence of social control mechanisms that regulate the use of commons without having to resort to property rights."

Paul Krugman has more on the work being done my Dr. Ostrom and Dr. Williamson here.

By the way, kudos to the Times for including this important piece of information on Dr. Ostrom: "Often working with her husband, Vincent, 90, who is a professor emeritus at Indiana..." No word on what role Dr. Williamson's wife has played in his research, if any.

[H/T to Shaker Scott Madin.]