The Nobel Memorial Prize in Economic Sciences for 2009 was shared by two American political scientists, rather than economists, one of whom was not only the first woman winner in the 41-year history of that Nobel Prize family “step-brother”, but also a student of fishing communities.
Professor Elinor Ostrom of Indiana University, who shared the prize with her Berkley colleague Oliver E. Williamson, has in her research found evidence that the so-called “Tragedy of the commons” can not always be applied – the theory that shared management responsibility rather results in no one taking long-term responsibility at all.
Both 2009 Prize winners have studied what economists call “governance”, the managing of common property. Ostrom’s contribution is explained in detail in her 1990 book “Governing the Commons”. She noted that earlier models described by economists assume a free rider problem where there is no trust and everyone is out for themselves. A free rider is someone who takes the benefits from common ownership without paying his or her fair share of the costs.
Ostrom’s work shows what happens when participants do not act as free riders but instead trust one another and cooperate to achieve a better outcome for all.
In the prize announcement, The Royal Swedish Academy of Sciences said that Professor Ostrom “has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories.”
The Economy Prize was established in 1968 “in Memory of Alfred Nobel”, but is presented on December 10 by the King of Sweden at the same ceremony as the established prizes for Physics, Medicine, Chemistry and Literature. The Peace Prize, in accordance with Alfred Nobel’s will, is both decided and presented in Oslo, Norway, then in union with Sweden.
Each prize this year amounts to 10 million Kronor (€969,000).
Professor Ostrom’s work also brings to mind two projects described lately on this website: The Koster Project on the Swedish Northwest coast, and a community fishermen’s trust on Cape Cod in Massachusetts, brought up as an US example of successful management at a recent EU regionalisation conference in Brussels.