I’ll stipulate the obvious: I don’t understand economics, I haven’t read Ostrom’s work, and I have little understanding of systems theory. Nonetheless, I think that from what I’m reading and hearing, that she has been awarded the Nobel Prize for examining some problems inherent in top-down management. I have copied this from a Reuters news article, referring to the Nobel’s announcement: “Elinor Ostrom has demonstrated how common property can be successfully managed by user associations,” the announcement read. “Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized.”
It seems to me patently clear that the more local the control, the more efficient and relevant the management is - regardless of the organization. For instance, being a long time participant in the edu-biz, I would say that her challenge - while directed at land management systems, could just as well apply to schools, but we’ve known that for a long time. What’s she actually done that merits recognition?
Actually, Ostrom is a political scientist, although she’s working in the branch of political science known as Rational Choice theory, which takes much of its concepts and methodology from economics. In this field, and in economics generally, theorists have been grappling with the problem of free riding, which is what rational actors will do if they get the chance, which in the case of public goods (such as defence, or a clean environment: goods that every one benefits from and that are non-reducible, which means that my ‘consumption’ of a clean environment does not reduce the cleanness of the environment) is a problem. It is a problem because the good becomes too expensive to support and it is a problem because people will not want to contribute to this good in the first place which means that there will not be a public good and everyone’s worse off. These are all examples of people acting rationally on an individual level which leads to a sub-optimal outcome on the collective level. Now to find and describe ways out of this quandary (which is what Ostrom devoted her life to) which is at the same time theoretical and very, very real and relevant, is a major accomplishment.
It may be simple and common sense but in political science and in economics, publications in the field of rational choice (which is arguably largely discarded these days, or at the very least not recognizably resembling what it was like 30 years or more ago) have had a tremendous influence. For instance, for the longest time theorists working in what is ‘group theory’ assumed that if there is an interest in society, this will automatically crystallize and lead to a group or an organization fighting for this interest. This is not the case, as another Olson (Mancur, not Elinor) demonstrated, because people will not want to take the first initiative of fear that they become ‘suckers’ - which means that others will free ride on the backs of their effort. Common sense as this may sound to you, this work and people working in this tradition have changed the face of social science in general - for better or for worse. This achievement should not be attributed to Elinor Olson’s work, and I’m not sure that she should be the one to get the award, but it certainly deserves recognition, if not a Nobel prize.
Ostrom’s work is significantly more quantitative and precise than the press release might lead you to believe. It’s easy to make an observation, but quantifying it can require real insight.