If you're a layperson, you probably haven't heard of either Elinor Ostrom or Oliver Williamson, the two American economists sharing this year's Nobel prize in economics for their work in "economic governance," otherwise known as social organization and cooperation. In fact, you may not even have heard that the Nobel economics prize isn't technically a Nobel prize (the Wire covers this annual debate here). So what do you need to know about these two, and the significance of their win? Here's the rundown from top econobloggers and journalists:
- A Nobel for Real, Live, Applicable Economics Calling the award "a great choice," ("Good on ya, Nobel committee," he adds) the Wall Street Journal's David Henderson points out that "mainstream economics has become highly mathematical and increasingly independent
from reality. Many economists sit in their offices and derive proofs."
That's not the case with Williams's work on vertical integration in firms and Ostrom's study of communal ownership, he says. Ostrom and Williamson are among the "[f]ew who go out and do the time-consuming work of examining the
institutional structures that humans build to solve their own
- Olstrom First Woman to Win Economics Nobel (And She Might Prevent Another Recession) Highlighting a fact others have noted but haven't explored in depth, Politics Daily's Joann Weiner writes that "it somehow feels right to acknowledge that a woman won the Nobel Prize in economics for the first time since the award was created in 1969." This is "particularly" nice, explains Weiner, "since women have consistently accounted for around 30 percent of all PhD students in economics." Plus, Weiner takes a look at Ostrom's research: "had it been applied, [it] just might have kept the world out of the mess we now find ourselves in"; Ostrom's and Williamson's work "can be useful inshaping debate on how to prevent another such crisis that could lead to a global recession."
- Choice 'Outside the Mainstream' Economist Tyler Cowen at Marginal Revolution says the prize is "a nod in the direction of social science, rather than economics per se," noting that Elinor Ostrom is, in fact, a political scientist. It is also, he agrees with Henderson, "rewarding larger rather than smaller ideas, practical economics rather than abstract theory."
- Significant Pick for a Couple of Reasons The Economist's Free Exchange blog makes four points on the pick: (1) "the awards are well deserved," (2) the committee "is looking to reward investigation of high level questions," (3) "the prize is not the exclusive domain of pure economists," and (4) the the committee is "looking to ... perhaps ... remind everyone everyone that there is a thing called institutional economics, which is often of some importance."
- There's This Thing Called 'Institutional Economics' Paul Krugman explains how so-called "institutional economics" is different from regular economics. "Neoclassical economics," he begins, "basically assumes that the units of economic decision-making are a given, and focuses on how they interact in markets." But institutional economics takes a look, for example, at "why some activities are carried out by large corporations, while others aren't." It "focuse[s] on the origins and nature of economics institutions," and was "very influential before World War II," at which point Keynesianism and mathematical models took over. But this prize is also, Krugman adds, pointing to a favorite topic of his that the Wire covers elsewhere, "a happy reminder that most of the profession is not caught up in the macro wars!"