It seems more or less beyond dispute that the Nobel committee was trying to send a political message by giving Barack Obama the Peace Prize. Now it looks like the Nobel brass has decided to send a similar, if slightly more subtle, message in awarding the economics prize to Elinor Ostrom of Indiana and Oliver Williamson of Berkeley. (It's worth mentioning that the two prizes are awarded by different committees, as many readers probably know...) Both spent their careers thinking about non-market interactions and Ostrom is actually a political scientist (not to mention her suspiciously Scandinavian-sounding name). The Times' Lou Uchitelle elaborates:
The prize committee, in making the awards, seemed to be influenced by the credit crisis and the severe recession that in the minds of many mainstream economists has highlighted the shortcomings of a unregulated marketplace, in which “economic actors,” left to their own devices, will act in their own self-interests and in doing so, will enhance everyone’s well-being.
The committee, in effect, said that theory was too simplistic and ignored the unstated relationships and behaviors that develop among companies that are competitors but find ways to resolve common problems. “Both scholars have greatly enhanced our understanding of non-market institutions” other than government, the committee said.
“Basically there is a common understanding that develops even among competitors when they are dealing with each other,” Mr. Shiller said, adding “when people make business contact, even competitors, they can’t anticipate everything, so an element of trust comes in.”
I'm by no means an authority. But, for what it's worth, I never heard of either winner during the two years I slogged through grad school in economics. (Apologies if that read a little too much like a Holiday Inn Express commercial...)
P.S. I don't say this to question the winners' worthiness; just to suggest their work lies outside the economics cannon most grad students are expected to absorb, which is a bit of a departure for the Nobel prize. (This is the first time since I left grad school about a decade ago that I haven't recognized at least one of the recipients in a given year.)
