October 12, 2009, 17:38 / Finance / Lifestyle

Nobel Prize in Economics awarded to Americans

Elinor Ostrom and Oliver Williamson received the prize for their study of the regulation of market economies. Sergei Smirnov Mikhail Malykhin

The 2009 Economics Prize, established in memory of Alfred Nobel by the Swedish State Bank, has been awarded to two American scientists, Elinor Ostrom and Oliver Williamson, for their research in the field of non-market economic management, the Royal Swedish Academy announced Monday in Stockholm. Sci.

Ostrom, 76, author of the classic "Governing Society: The Evolution of Institutions for Collective Action," became the first woman to win the Nobel Prize in economics since the prize was established in 1969, WSJ writes.

Ostrom "debunked the widely held view that collective management of property is ineffective and that it should either be privatized or nationalized," the Nobel committee said. “Having studied numerous examples of public regulation of fisheries, the use of pastures, forests, lakes and groundwater, Ostrom showed that in many cases the results turn out to be significantly better than the predictions of standard models. She revealed the laws of the formation of complex decision-making practices and ensuring relationships aimed at successful conflict resolution interests," the message says.

Ostrom, who answered questions by phone after the honorees were announced, said it was a "huge surprise" for her. Ostrom is a political scientist by training, but she considers herself a political economist.

Williamson created a theory about the limits of applicability of companies as structures for resolving business conflicts. “The disadvantage of market management in the economy is the lack of unity in goals and opinions. The disadvantage of the company is the possibility of abuse. Williamson’s main conclusion that firms are more successful in regulating the economy in conditions of limited competition has received empirical confirmation,” it says, in particular, in a message from the Nobel Committee.

The Economics Prize was not mentioned in Alfred Nobel's will. It was established much later - in 1968 by the Swedish State Bank in connection with its 300th anniversary. Since then, every year the mentioned bank contributes an amount equal to one Nobel Prize - 10 million Swedish kronor (about $1 million euro). The announcement of this year's economics laureate caps the traditional Nobel week of unveiling the prestigious award, which began on October 5.

“This work is extremely important today,” says Sergei Guriev, rector of the Russian School of Economics, who counts himself among Williamson’s followers. According to Guriev, the work of these scientists became fundamental to the theory of institutional economics, which examines the imperfections of market mechanisms. The theory proves the need for market regulation.

“If you open Williamson’s major work (written in 1975) and Ostrom’s work (1990), you will not see predictions of today’s crisis, but this does not mean that these works are not important today,” Guriev notes. These works provide insight into exactly how to study and intervene in market regulation so that the next crisis is less painful.

“Today’s discussion about new regulation of financial markets is based on the work of Williamson’s followers,” recalls Guriev. “His followers had previously been awarded Nobel Prizes, in particular Ronald Coase and Douglas North. Now justice has triumphed.”