Stockholm, October 12 (Xinhua) — The Royal Swedish Academy of Sciences announced on the 12th that the 2009 Nobel Prize in Economics will be awarded to two American economists, Elinor Ostrom and Oliver Williamson, in recognition of their contributions to the analysis of economic governance.
Elinor Ostrom
Oliver Williamson
The Royal Swedish Academy of Sciences stated in a declaration that Ostrom was awarded for her “analysis of economic governance, especially the commons,” while Williamson was awarded for his “analysis of economic governance, especially the boundaries of the firm.”
At 13:00 local time on the 10th (19:00 Beijing time on the 12th), Gunnar Öquist, the Permanent Secretary of the Royal Swedish Academy of Sciences, announced the names of the winners in both Swedish and English in the Academy’s session hall. Subsequently, Bertil Holmlund, Chairman of the Nobel Prize Committee for Economics, and committee member Per Krusell (Ellingsen) respectively introduced the achievements of the winners.
According to the introduction, economic transactions occur not only in markets but also within companies, associations, households, and intermediary agencies. Although economic theory comprehensively reflects the advantages and limitations of markets, it has traditionally paid less attention to other institutional arrangements. The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can be used to explain most forms of social organization. Ostrom’s research revealed how user organizations can effectively manage common resources. Williamson’s research developed a theory concerning the firm as a structure for resolving conflict of interest.
Öquist also called Ostrom to congratulate her. Ostrom told the media present that she was very surprised and deeply honored to receive the Nobel Prize. She said she does not intend to use the prize money for herself; there are many excellent scholars and researchers in countries like the United States and China, and if possible, she hopes to use the prize money to support economic research in these countries.
Ostrom was born in 1933 in Los Angeles, USA. She is the first woman ever to receive the Nobel Prize in Economics and is currently a professor at Indiana University. Williamson was born in 1932 and is currently a professor at the University of California, Berkeley.
Ostrom Becomes the First Female Winner in the History of This Award
American female economist Ostrom received half of the 10 million Swedish kronor (approximately $1.428 million) Nobel Prize in Economics for her “analysis of economic governance, especially involving common property or property under public control.”
The selection committee stated at the press conference that traditional views held that common property could not be effectively managed and needed to be “managed by a central authority or privatized (disposed of by individuals).” Ostrom’s research results overturned this view.
After conducting extensive research on common resources such as fisheries, pastures, woodlands, lakes, and groundwater basins, Ostrom concluded that the management effectiveness of such common property is “often better than what people previously expected based on standard theories.”
She found that resource users can often develop complex decision-making and enforcement mechanisms for various conflicts of interest. In her research, she summarized the characteristics of good mechanisms.
Regarding how to handle the prize money, Ostrom said she had not yet seriously considered it, but might donate it to research projects such as political theory and policy analysis at her university, stating, “In any case, it will not be used for personal purposes.”
Ostrom was born in 1933 and is currently a professor at Indiana University. Her research fields include public economics, political theory, and policy analysis.
Discovering Flaws in Governance Structures
Professor Oliver Williamson of the University of California, Berkeley, received the other half of the prize for his “analysis of economic governance, especially the boundaries of the firm.”
The selection committee said that Williamson conducted research on markets and firms characterized by vertical hierarchical structures, finding that these two governance structures have different characteristics and their own flaws when resolving conflicts of interest.
Selection Insights
The Financial Crisis Factor Played a Small Role
According to Xinhua News Agency, the selection committee stated that the efforts put in by the two winners over the past 30 years “show that economic analysis can give people a clearer understanding of most forms of social organization... bringing the study of economic governance from the periphery of academic attention to the forefront.”
As many countries worldwide fell into economic crisis, a series of problems, such as the failure of corporate management to effectively prevent risks, prompted people to reflect on the governance mechanisms of corporations and other social institutions.
The Nobel Prize in Economics is usually awarded for research results that have stood the test of decades. The selection committee said that although the current financial crisis was one of the factors considered by the committee members during the selection process, “it did not carry much weight... we do not want to find several years later that the relevant theories are untenable.”
Biographies
Interpreting Markets and Firms
Oliver Williamson was born in 1932 and is currently a professor at the University of California, Berkeley. His research field is macroeconomics. He won the prize for his “analysis of economic governance, especially the boundaries of the firm.”
The selection committee said Williamson studied markets and firms characterized by vertical hierarchical structures, finding that these two governance structures have different characteristics and flaws in resolving conflicts of interest. Flaws in markets manifest as a large number of disagreements and constant disputes between different entities, while flaws in firms manifest as management potentially suppressing different voices and abusing power.
According to Williamson’s theory, in a competitive market environment, buyers and sellers can turn to other trading partners after a disagreement, making market operations relatively effective. However, in markets where competition is insufficient, “firms can resolve conflicts of interest more effectively than markets.”
Exploring Choices Under Different Institutions
Elinor Ostrom was born in 1933. She received her PhD in Political Science from the University of California, Los Angeles (UCLA) in 1965. She was elected a Fellow of the American Academy of Arts and Sciences in 1991 and a member of the National Academy of Sciences in 2001. Currently, Ostrom is a professor of Political Science and Public and Environmental Affairs at Indiana University.
Ostrom’s main research directions include: how to use findings from cognitive science to build viable models to explore and explain human choices under different institutional arrangements; and how various institutions generate information that helps individuals make decisions. Ostrom’s representative work is Governing the Commons: The Evolution of Institutions for Collective Action, published in 1990, which is an important work in the fields of institutional economics and public policy research. Ostrom has visited China many times. (Xinhua News Agency)
Reactions
As the first female winner since the establishment of the Nobel Prize in Economics, Ostrom told reporters at the Nobel Prize press conference via telephone on the 12th that she felt “deeply honored and also humbled... I’m afraid it will take some time to understand exactly what happened.”
Williamson told the Associated Press on the 12th that receiving the recognition gave him a deep sense of “satisfaction.” He expressed hope that future research involving economic activities would pay more attention to various types of organizational institutions.
Prize Trivia
Mostly Awarded to Individuals: Since the first Nobel Prize in Economics was awarded in 1969, there have been 41 editions. The total number of winners is 64, of which 22 editions were won by a single person, 15 editions were shared by two people, and 4 editions were shared by three people. To date, no one has won the Nobel Prize in Economics multiple times.
Oldest 90, Youngest 51: So far, the youngest Nobel Prize in Economics winner is American economist Kenneth Arrow, who was only 51 when he won in 1972. The oldest winner is American economist Leonid Hurwicz, who was 90 years old when he won in 2007; he is also the oldest Nobel Prize winner across all categories.
Female Winner “Long Overdue”: The first female Nobel Prize in Economics winner did not appear until 2009; she is American economist Elinor Ostrom.
Dutch “Brother Duo” Winners: Additionally, the Tinbergen brothers from the Netherlands respectively won the 1969 Nobel Prize in Economics and the 1973 Nobel Prize in Physiology or Medicine, making them a unique “brother duo” among all Nobel Prize winners.
Acceptance Comments
Xinhua News Agency, Chicago, October 12 — American economist and Indiana University professor Elinor Ostrom said on the 12th after learning she had won the Nobel Prize in Economics: “This is truly an unexpected surprise and exciting news. I am very grateful!”
Ostrom is the first woman to be awarded the Nobel Prize in Economics since its inception in 1968. When asked about her views on the significance of this award, she said: “We have entered a new era where women’s capabilities in scientific research are recognized. I am lucky to be the first, and I will not be the last.”
Speaking at a press conference about how she would use the prize money, she said: “Previously, my prize money was used in cooperation with the Indiana University Foundation. This time, my direction is to invest in my laboratory and spend the money on my students and excellent colleagues.”
Regarding the content of her speech at the award ceremony on December 10, she said: “I haven’t had time to think about it yet, but I think the main content will be about my current theme of collaborative work—when everyone finds a way to cooperate, they can build respect and solve problems.”
Indiana University President Michael McRobbie said at a subsequent press conference: “This is truly a surprise. Professor Ostrom has won universal recognition around the world for her creative research. For her, the Nobel Prize is perfectly fitting.”
McRobbie said: “We are incredibly proud of her. Everyone at Indiana University and in Indiana congratulates her on winning the award!”
Source: http://news.sina.com.cn/z/2009Nobel/index.shtml
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