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Suprise Nobel Win

The Nobel Prize Economic committee really shook things up this year. Besides nominating U.S. President Barack Obama for the Nobel Peace Prize, the winner for the Nobel Economics Prize, Elinor Ostrom, is a departure from traditional winners.

Steven Levitt, the author of “Freakonomics,” writes in his blog Economist View that economists will disapprove of yesterday’s decision to award the Nobel Economics Prize to Ostrom because it signals a shift towards rewarding social scientists.

He also wrote an opinion article for the New York Times entitled, “What This Year’s Nobel Prize in Economics Says About the Nobel Prize in Economics.” In this post he states that the prize choice shows that the prize is moving toward a Nobel in social science, not a Nobel in economics.

Ostrom is the first female economist to win the prize. She won the prize for showing that privatizing natural resources is not the route to halting environmental degradation.

In her classic work Governing the Commons: The Evolution of Institutions for Collective Action, Ostrom demonstrates that when communities are given the right to self-organize they can democratically govern themselves to preserve the environment.

Levitt writes that, “The economics profession is going to hate the prize going to Ostrom even more than the Republicans hated the peace prize going to Obama.”

THe U.K. based paper The Guardian lauded the Nobel Committee’s decision on the basis that Ostrom proves her findings three times over when it comes to methodology.

“The Nobel committee should be applauded for recognising such rigorous theoretical and empirical work. Shining light on Ostrom is a call to economists to spend a lot more time analysing human behaviour, rather than assuming that we are all rational selfish individuals. It is also a call on economists to become more empirical and to find ways to validate their theories.”

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