Americans take Nobel in economics

Scholars' work could avert crises

The Associated PressOctober 13, 2009 

— One scholar studies how best to manage resources like forests, fisheries and oilfields. A fellow American looks at why some companies grow so large. Together, they're winners of this year's Nobel Prize in economics for groundbreaking work that could affect efforts to prevent another global financial crisis.

Elinor Ostrom, 76, known for her work on the management of common resources, is the first woman to win a Nobel in economics. She shares this year's prize with Oliver Williamson, 77, who pioneered the study of how and why companies structure themselves and how they resolve conflicts.

Monday's final prizes of 2009 capped a year in which a record five women won Nobels. And it was an exceptionally strong year for the United States, too. Eleven American citizens were among the 13 Nobel winners.

The Royal Swedish Academy of Sciences said it chose Ostrom and Williamson for work that "advanced economic governance research from the fringe to the forefront of scientific attention." They will share the $1.4 million prize.

Ostrom showed how common resources -- forests, fisheries, oilfields, grazing lands and irrigation systems -- 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 -- as opposed to just having somebody in Washington ... make a rule," Ostrom, a political scientist at Indiana University, said during a brief session with reporters in Bloomington, Ind.

Williamson, an economist at the University of California, Berkeley, found that companies are typically better able than markets to resolve conflicts when competition is limited, the citation said.

The academy did not specifically mention the global financial crisis. But many of the problems at the heart of it -- executive compensation, risky and poorly understood securities -- involve a perceived lack of oversight.

"There has been a huge discussion how the big banks -- the big investment banks -- have acted badly, with bosses who have misused their power, misused their shareholders' confidence, and that is in line with [Williamson's] theories," prize committee member Per Krusell said.

Experts said the two scholars' research did not suggest that more government oversight was the way to prevent financial crises. Still, they said the work of both could help shape debate and inspire research to help prevent another global recession.

It also could influence the thinking on other divisive issues, such as health-care coverage and global warming, experts said.

"The one lesson from the financial crisis is that we have overconfidence in institutions that are important to the functioning of the economy," said Barak Richman, a law professor at Duke University who completed his doctorate under Williamson's supervision.

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service