Woman wins Nobel economics prize

A US academic who proved that communities can trump state control and corporations became the first woman to win the Nobel prize in economics, sharing it with an expert on conflict resolution.

Elinor Ostrom of Indiana University defied conventional wisdom with studies that showed that user-managed properties - such as community fish stocks or woodland areas - more often than not were better run than standard theories predicted.

"Since we have found that bureaucrats sometimes do not have the correct information while citizens and users of resources do, we hope it helps encourage a sense of capacity and power," the professor said.

The previously accepted view was common property was poorly managed and should be either regulated centrally or privatised.

The Royal Swedish Academy of Sciences awarded her half the 10 million Swedish crown (NZ$2m) prize, with the other half going to Oliver Williamson, who was recognised for his analysis of conflict resolution by firms and markets.

"Over the last three decades, these seminal contributions have advanced economic governance research from the fringe to the forefront of scientific attention," it said in a statement.

After a week of Nobel drama that included the gasp-inducing selection of US President Barack Obama for the peace prize, the economics category risked being an anti-climax.

But the choice of a woman for a prize in a field dominated by men added a final twist to this year's awards, showing again the Nobel committees' penchant for springing surprises.

"There are many, many people who have struggled mightily and to be chosen for this prize is a great honour and I'm still a little bit in shock," Ostrom, a professor in political science, told the news conference.

MONGOLIAN GRASSLANDS

Studies of how organisations function may sound dry, but the examples that pepper Ostrum's work are anything but. A colourful case in point: grasslands in Mongolia, China and Russia.

When China and Russia imposed agricultural collectives, the grasslands became more heavily degraded than in Mongolia, where nomads moved herds with the seasons. When China later privatised some grasslands the land became even more degraded.

"Both socialism and privatisation are associated with worse long-term outcomes than those observed in traditional group-based governance," the academy noted.

Professor Tore Ellingsen of the Royal Swedish Academy said he hoped Ostrum's work proved inspirational. "I hope that it will be inspiring for women researchers that you don't have to be a male in order to win the economics prize," he said

The academy said Ostrom and Williamson, of the University of California, Berkeley, helped explain that economic analysis can shed light on most forms of social organisation.

"Economic transactions take place not only in markets, but also within firms, associations, households, and agencies," it said, adding that economic theory delved deeply into markets but had not sufficiently explored this huge area of activity.

Ostrom, 76, whose work was partly inspired by Williamson, gathered her most important research in a 1990 book called "Governing the Commons: the Evolution of Institutions for Collective Action."

Williamson did much of his key work in the 1970s. He showed how hierarchical organisations could thrive because they were effective at resolving conflicts and in some ways were more efficient than market-based systems.

But he also argued that problems could emerge when executive authority was abused, making such systems less productive.

Williamson, who said the possibility of bagging a Nobel always came to mind at this time of the year, described it as "a great pleasure."

Speaking to Reuters, the 77-year-old economist said he was pleased to see how organisational theory had become a much more vibrant field over the years. He also offered a particular slant on the need for reform following the global economic downturn and said the subject offered a tool to fight future crises.

"Are there relationships between the Fed and the banking sector, on which it has such a significant influence, that haven't been thought through as fully as they might in organisational terms?" he asked.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It is not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.

- Reuters