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WASHINGTON – Elinor Ostrom of Indiana University became the first woman to win a Nobel Prize in economics, honored along with fellow American Oliver Williamson on Monday for analyzing economic governance – the rules by which people exercise authority in companies and economic systems.
Ostrom was also the fifth woman to win a Nobel award this year – a record for the prestigious honors.
It was also an exceptionally strong year for the United States, with 11 American citizens – some of them with dual nationality – among the 13 Nobel winners, including President Obama, who won the Nobel Peace Prize on Friday.
Ostrom, 76, and Williamson, 77, shared the $1.4 million economics prize for work that “advanced economic governance research from the fringe to the forefront of scientific attention,” the Royal Swedish Academy of Sciences said.
Ostrom, a political scientist at IU in Bloomington, showed how common resources – forests, fisheries, oil fields or grazing lands – can be managed successfully by the people who use them, rather than by governments or private companies.
“What we have ignored is what citizens can do and the importance of real involvement of the people involved – versus just having somebody in Washington ... make a rule,” Ostrom said in Bloomington.
Ostrom said it’s an honor to be the first woman to win a Nobel Prize in economics – and promised that she won’t be the last. She said people discouraged her from seeking a doctorate when she applied for graduate school, but she loved studying economics.
Williamson, an economist at the University of California, Berkeley, focused on how firms and markets differ in the ways that they resolve conflicts. He found that companies are typically better able to resolve conflicts than markets when competition is limited, the citation said.
Ostrom, also the founding director of Arizona State University’s Center for the Study of Institutional Diversity, devoted her career to studying the interaction of people and natural resources. One notable publication she wrote in 1990 examined both successful and unsuccessful ways of governing natural resources – forests, fisheries, oil fields, grazing lands and irrigation systems – that are used by individuals.
Ostrom’s work challenged conventional wisdom, showing that common resources can be successfully managed without privatization or government regulation.
To explain her ideas, the academy cited an example about dams in Nepal that Ostrom used in her 1990 book “Governing the Commons: The Evolution of Institutions for Collective Action.”
Local people had for many years successfully managed irrigation systems to allocate water between users, but then the government decided to build modern dams made of concrete and steel with the help of foreign donors.
“Despite flawless engineering, many of these projects have ended in failure,” the academy said.
That was because the new, modern dams cut out communications and ties between the users. The new dams required little maintenance whereas the earthen local dams forced users to work together to keep them functional.
Ostrom told the academy by telephone that she was surprised by their choice.
“There are many, many people who have struggled mightily and to be chosen for this prize is a great honor,” Ostrom said. “I’m still a little bit in shock.”
Ostrom doesn’t know exactly how she will spend her share of the $1.4 million in award money, but she said she will invest it in her students and “wonderful” colleagues.
Williamson said he was “gratified” by the honor and hoped that in the future “organizations will play a more prominent role in the study of economic activity.”
“The organization of the government itself is something which we ought to examine in a more self-conscious way – the Federal Reserve and the Treasury and the Securities Exchange Commission,” Williamson said. “The mission that each of them has is mainly economic, but should be informed by good organizational practices.”
