Monday, October 12, 2009

This Year's Nobel Prize In Economics Goes to...

A political scientist and an economist! Congratulations Elinor Ostrom and Oliver Williamson!
To read more about their contributions specifically in the field of "New Institutional Economics," the following are some related links:

Blogging by Paul Krugman, "An Institutional Economics Prize. "
The way to think about this prize is that it’s an award for institutional economics, or maybe more specifically New Institutional Economics.
Commentary by Michael Spence, "Markets Aren't Everything." (Via Mankiw)
The common theme underlying the prize this year is that markets do not solve all problems of resource allocation and incentives well or even at all. That is not a new idea. What is important is that people and societies find ways through organizational structures and arrangements, political and other institutions, values, incentives and recognition, and the careful management of information, to solve these problems. Professors Ostrom and Williamson have led the development of this increasingly important part of economics.
...The prizes this year can be celebrated in recognizing two highly original scholars and in so doing, highlighting the important parts of economics, political science and political economy that they have done so much to build.
So the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama. Economists want this to be an economists’ prize (after all, economists are self-interested). This award demonstrates, in a way that no previous prize has, that the prize is moving toward a Nobel in Social Science, not a Nobel in economics.

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