The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009
Elinor Ostrom, Oliver E. Williamson
Telephone interview with Elinor Ostrom recorded immediately following the announcement of The 2009 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 12 October 2009. The interviewer is Adam Smith, Editor-in-Chief of Nobelprize.org.
[Elinor Ostrom] Hello
[Adam Smith] Oh, good morning. May I speak to Elinor Ostrom please?
[AS] Hello, my name is Adam Smith. I'm calling from the Nobel Foundation's official website, in Stockholm.
[EO] Yes. Adam Smith, what a name! I'm sorry, you're kidded a lot, I'm sure.
[AS] Exactly, and I think sometimes the new Economics Laureates think I'm a hoax caller when I do this. We have a tradition of recording very short telephone interviews for the Nobel Foundation website, with the new Laureates, so would you mind speaking for a few minutes?
[EO] Ah, yes, fine.
[AS] Thank you very much indeed. Of course, congratulations on the award.
[EO] Well, it's an unbelievable honor, yes.
[AS] You, as I know has just been pointed out on the Press Conference, are the first woman in the forty year history of the Sveriges Riksbank Prize in Economic Sciences to be awarded. Does that make it a greater honor?
[EO] Yes. Having lived through an era, where I was thinking of going to graduate school and was strongly discouraged because I would never be able to do anything but teach in a city college ... Ah ha ha, life has changed!
[AS] Do you think that the ratio of Laureates in Economic Sciences – the gender ratio – is it in any way representative of the ratio of people working in the subject now or has it really changed?
[EO] It's slowly changed. I've attended economic sessions where I've been the only woman in the room, but that is slowly changing and I think there's a greater respect now that women can make a major contribution. And I would hope that the recognition here is helping that along.
[AS] I imagine it sends a strong signal, yes. Now, you work on the management of common property by common ownership contrasting it with the effects ...
[EO] Among other things, yes.
[AS] Would it be true to say that, broadly, you've found that common ownership can be more effective than people thought it might be?
[EO] Yes! It's not a panacea but much more effective than our common understanding.
[AS] And, is there one example you'd like to give of where this is so?
[EO] Well, let me use the example of lobster fisherman in the state of Maine. In the 1920s, they almost destroyed the lobster fishery. They regrouped and thought hard about what to do and over time developed a series of ingenious rules and ways of monitoring that have meant that the lobster fishery in Maine is among the most successful in the world. The big threat that comes now is that the other fisheries around it have so over-fished fish, that the lobster is a little bit of an extreme example of ... If there were an illness or something that came, a bug, that infected them, they would be very exposed. But they have been incredibly effective through the years. There are many other small to medium sized groups that have taken on the responsibility for organizing resource governance. We've studied several hundred irrigation systems in Nepal. And, farmer-managed irrigation systems are more effective in terms of getting water to the tail end, higher productivity, lower cost, than the fancy irrigation systems built with the help of Asian Development Bank, World Bank, USAID, etc. So, what we have is many local groups are very effective, but that it's not universal. So we can't just now be naïve and think, 'Oh, well, just leave it to the people, they will always organize.' There are many settings that discourage self-organization
[EO] And, thus, we must understand both the conditions - that they can, but the conditions under which they will.
[AS] Well, I was going to ask you whether your research has also shed light on the conditions that lead to good self-organization. Are there particular features that have to be in place, for instance enough time for participants to work out what their set of regulations should be?
[EO] Yeah, and I have an article in Science in July of this past year which lays out a broad diagnostic framework and identifies a number of variables that are associated with self-organization.
[AS] Would you say broadly though that self-organization should be used and trusted more than it is now? That society should move towards trying to implement self-organizing structures?
[EO] Yes, but not with a formula. So there are many, many efforts now to decentralize and they create a rigid formula and give people rules from on top and say, 'Now it's yours.' And that isn't worked very well either.
[AS] So, again, there's a great deal of subtlety to it ...
[EO] It's this ... yes. And, you think about the variety. If you look at a countryside, think of the variety out there in terms of the ecological variety. Well, if people are going to manage ecological variety, no single set of rules will work in a semi-arid versus a tropical-wet region. They have to be different.
[AS] Indeed. Another thing you've done is to conduct lab experiments ...
[EO] Oh, yeah!
[AS] Which I believe have shown that people appear to be more willing to enforce mutually agreed rules than had been expected, again.
[EO] Yes, we're showing that. But we're also showing a very important role for face-to-face or even written communication. So, the prediction was that nobody would self-monitor because that's a second level social dilemma, if you go to Game Theory. But, what we've found is that people will, but it can be ... people can escalate into, 'I'll punish you, you punish him, mamamamamma,' and it gets worse and worse. So, with communication, where there's an agreement on what is going to be the ... what we are going to do. The 'we' then being well-defined, then people can follow rules, be cooperative and, occasionally, sanction one another to help that continue.
[AS] You mentioned Game Theory, there. How much of this is actually an extension of Game Theory and what we're looking are repeated games in developing these structures?
[EO] The ... Game Theory has been very, very important in our work in that we've been able to take game-theoretic models and put them in the lab and test them. And thus my early exposure in the 1980s to the work of Reinhardt Selten, who is himself a Nobel Laureate, was a very, very important step in my training. We still ... Classical Game Theory is very predictive in some environments but not fully predictive, by any manner/means, in an environment which is a social dilemma. But very helpful for us in analyzing and as we develop a behavioral theory of humans and of other formal mechanisms we can explain why people do cooperate in some settings and not others.
[AS] Right, yes. I'd like to finish just by asking whether you consider that your work is economics or political science or social science, or maybe it doesn't matter what it is, what it's branded?
[EO] I consider it to be political economy or the study of social dilemmas. I was trained heavily in economics as an undergraduate. I studied with Armen Alchian and others, and then worked with Reinhardt Selten in the 80s. I work with two colleagues, economists, here in Bloomington that have been very, very important in my work. My husband worked with Charlie Tiebout and they developed a theory of metropolitan organization that was an economic/political science overview, so the ... I've crossed disciplines, there's just no question about it!
[AS] I suppose this award has the potential to catch the public imagination, because the citation brands it as economic governance and you're talking about people getting involved in their own governance.
[AS] It's likely to be ... it's likely to spark people's imaginations and they're going to ...
[EO] I hope! Ha ha! That's what I've been working on for all my life! Humans have great capabilities and somehow we've had some sense that the officials had genetic capabilities that the rest of us didn't have.
[AS] Uh hum.
[EO] I hope we can change that.
[AS] Excellent. Well that's a lovely note to stop on, thank you. When you come to Stockholm in December to receive your Prize we have a change to speak at greater length, so ...
[EO] Wonderful, I'll look forward to that.
[AS] I look forward to it too. I hope you have a splendid rest of day and once again congratulations.
[EO] Thank you very, very much.
[AS] Thank you, bye, bye.