Yesterday, on his New York Times blog Freakonomics, Steven Levitt wrote that until the Economics Nobel Prize announcement he had never heard of Elinor Ostrom, one of the two Nobel laureates. He writes:

If you had done a poll of academic economists yesterday and asked who Elinor Ostrom was, or what she worked on, I doubt that more than one in five economists could have given you an answer. I personally would have failed the test. I had to look her up on Wikipedia, and even after reading the entry, I have no recollection of ever seeing or hearing her name mentioned by an economist.

Thankfully, he admits that this reflects very poorly on him. I agree. But it also reflects poorly on the state of modern economics. Central to Ostrom’s work is the evidence that the private sector and human beings are very good at supplying goods and services and solving problems that economics textbooks claim can only be provided and solved by the government.

For anyone who wants to learn more about the tremendous contribution of Elinor Ostrom to the field of economics, I suggest that you read this great article by my colleague Paul Dragos Aligica about his former teacher.

When economists show that market arrangements fail, they usually make the simple recommendation that “the” state should take care of these problems. Elinor Ostrom has demonstrated empirically that “the” state may not be “the” solution. Her work argues for the wisdom of institutional diversity, looking to individuals to solve problems rather than relying on top down, one-size-fits-all solutions. The conventional wisdom assumes that natural resources and environmental problems should be solved in a centralized—and if possible, global—manner. Through innovative analysis in the field, in the experimental laboratory, and in theory, Ostrom’s work has show that creative solutions to problems such as the depletion of common pool resources exist outside of the sphere of national governments.

As for me, I think it is wonderful to be an economist when a scholar Elinor Ostrom is recognized for her work in our field.