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What this Nobel prize means
It's a nod in the direction of social science, rather than economics per se. It's another homage to the New Institutional Economics and also to Law and Economics. It's rewarding larger rather than smaller ideas, practical economics rather than abstract theory. It's a prize somewhat outside of the mainstream. As you probably know by now, Ostrom is a political scientist and she has spent much of her career at Indiana University.
I was delighted to hear of Ostrom winning (which I had not expected) but frankly it makes the omission of Gordon Tullock all the more glaring.
Here are interviews with Elinor Ostrom (recommended). On Elinor Ostrom, here is Peter Boettke and on Williamson and Ostrom here is Lynne Kiesling. Here are varied reactions. Here is an excellent list of long links on Ostrom. Here is Henry on Elinor Ostrom.
Check out Ostrom's cites on Google Scholar.
Posted by Tyler Cowen on October 12, 2009 at 03:55 PM | Permalink
Comments
They cant be unknown in the USA ,but works by both have been translated into foreign language. I have read both
Posted by: k at Oct 12, 2009 4:48:45 PM
Senator Tom Coburn would exclude Political Science from NSF awards.
http://crookedtimber.org/wp-content/uploads/2009/10/Coburn_NSF.pdf
Here is Crooked Timber talking about it late last week.
http://crookedtimber.org/2009/10/07/tom-coburn-doesnt-like-political-science/
I still can't decide though if this is a win for Coburn since the Peace Prize was such a controversy.
Both Williamson and Ostrom really do deserve this. Even if some econheads don't know them that well. Us political economist already knew that these were part of the cannon.
Posted by: Richard Pointer at Oct 12, 2009 4:57:25 PM
Economics per se? Part of economics includes institutional economics. Part of economics includes behavioural economics? Is the only "pure" economics mathematical economics or theoretical economics? This is a big tent. It even includes political economics.
Posted by: Bill at Oct 12, 2009 5:09:00 PM
Boetke actually wrote about Ostrom not Williamson
Posted by: simmo at Oct 12, 2009 5:21:35 PM
Tullock should have won the Prize in 1986. But having been frozen out at that time - by Buchanan's successful lobbying efforts, according to what may (or may not) be urban legend - it is difficult to see how he could win it now. Is the Nobel Committee going to say "Oops, we are correcting an omission"?
Posted by: dan cole at Oct 12, 2009 5:25:55 PM
Dan Cole,
I was there when Buchanan won, the first person he thanked in his public address at the Public Choice Center was his long time associate Gordon Tullock. TV camera and radios and print journalist were there --- he acknowledged Gordon Tullock first. He was tremendously gracious, so the idea that Buchanan excluded Gordon from the prize has to stop (I have heard this too many times). Second, the prize technically was given for his work in constitutional analysis, public economics, and the application of economic analysis to political decision making. One can see in that emphasis on constitutions the focus on Buchanan.
I do believe Tullock should have won, but my best odds would have been on winning for his development of the theory of rent-seeking along with Anne Krueger and Jagdish Bhagwati. I still am holding out hope for that.
Posted by: Peter Boettke at Oct 12, 2009 5:53:59 PM
The inside skinny on what happened with the Buchanan prize is that for whatever reason, Tullock was
somehow not all that high on the committee's radar screen at the time. The real issue was whether or
not the late Richard Musgrave, father of conventional public finance, and long a debater with Buchanan
about the proper way to do public economics, would share it with him. For whatever reason, they
decided not to give it to Musgrave (who never got one and is now dead), leaving Buchanan to get it
alone.
BTW, I went over and looked at that jobrumor blog linked into indirectly through this post. This is
the most depressing thread I think I have ever seen on an economics blog. It is an awful statement
about the low quality of grad econ education, not to mention the screaming arrogance of screamingly
ignorant people. Ack!
Posted by: Barkley Rosser at Oct 12, 2009 6:03:53 PM
job rumor blogs are evil. I'm on the market and I'm not going near them. They don't do any good and tend to attract the most nasty commenters.
Posted by: Sebastian at Oct 12, 2009 6:24:36 PM
Peter, I trust you're right, but the fact that Buchanan thanked Tullock graciously would not necessarily be inconsistent with a desire to win the Prize alone.
As for economists who are complaining that Ostrom should not have won the Prize because (a) they have never heard of her and/or (b) she is a Political Scientist, they should be embarrassed by their own ignorance. The presumption that a political economist cannot contribute fundamental insights to economics is the worst kind of stupid academic chauvinism.
Posted by: dan cole at Oct 12, 2009 6:57:22 PM
Looks like the bet on Fama at 2/1 proves something about the Efficient Market Hypothesis...that if the bet contained all the information in the market, and he lost, then
Posted by: Bill at Oct 12, 2009 7:42:55 PM
Looks like the bet on Fama at 2/1 proves something about the Efficient Market Hypothesis...that if the bet contained all the information in the market, and he lost, then
Posted by: Bill at Oct 12, 2009 7:43:06 PM
This year's announcement brought a smile to my face, like last year. It's great to have two more institutional economists recognized, both because institutions are important, but also because I happen to teach institutional economics. Good for economics, good for OE and EO, and good for me.
Posted by: David EA at Oct 12, 2009 8:24:55 PM
Correction: I shouldn't have posted twice, and it should read "unlike last year," not "like last year." I'm not a Krugman fan.
Posted by: David EA at Oct 12, 2009 8:27:56 PM
How many social scientists (economists, political scientists, etc.) have predicted Ostrom winning the Nobel? If the answer is "very few", then the award is not deserved, because few people think her work is so groundbreaking that she should win a nobel. All the rest is after-the-fact theorizing.
And the google scholar cite does not mean much. An interdisciplinary person certainly has a lot of cites---from various disciplines.
She's an extremely nice person, to be sure.
Posted by: who predicted her? at Oct 12, 2009 10:48:12 PM
The first fact about Ostrom that struck me isn't that she's a woman or a political scientist, but that she works somewhere other than Berkley-Chicago-Ivy. Of course, Williamson is from Berkley.
Posted by: Ted Craig at Oct 13, 2009 8:23:16 AM
That may also be the reason so few predicted her winning.
Posted by: Ted Craig at Oct 13, 2009 8:40:29 AM
I was rooting for a double Nobel for Alchian and Demsetz. They were pioneers in the application of economics to the insides of the firm, to the structure of the market, to private property, to the importance of governance, to the impact of competition, to the issues of hold-up and opportunism, to asset specificity, to the value of reputation when information is costly.
Posted by: B.B. at Oct 13, 2009 10:12:09 AM
Ostrom is a tremendous pick for people who want to see economics move beyond the tired (and empirically false) neoclassical model. Here work is both profoundly important because all human groups can be viewed as a common pool resource. That includes firms, governments, churches, charities, and others. Neoclassical economics generally tries to solve principle-agent problems with incentives. In a world of perfect information you would do this by paying each employee according to how much revenue their work efforts created to the firm's bottom line. But in a world of imperfect information that is impossible to do, so incentives are as crude and arbitrary - and as prone to run into the law of unintended consequences - as the incentives created by governments. Moreover, incentives create a crowding-out effect on the role of cooperative behavior for both intrinsic moral reasons and as a costly signal of one's fitness as someone to cooperate with in the future.
Her work is absolutely integral to modern economics - and many libertarians (though certainly not all!) will resist kicking and screaming because they are too wedded to the (empirically false) view that self-regarding rational actors are capable of reaching cooperative outcomes.
Posted by: Justin Martyr at Oct 13, 2009 11:36:51 AM
