So it seems numerous Economists are scratching their heads about one of the winners of the “econ nobel”. Some grad students are doing much worse (anonymously of course). The Freakonomics blog sort of suggested this would happen, and there are a couple of good posts on Elinor Ostrom and Oliver Williamson, at Marginal Revolution, Austrian Economists, Charter Cities and Vernon Smith. The Economist has a good overview, Glaeser wrote a good blog post in the NYT, and the WSJ has good coverage as well.
The work Ostrom and Williamson have done is really interesting, and far more so than simplistic attempts to apply math to small data-sets from markets (here’s a non-naive one). My own take on the “Why Now” debate is that the selection committee chose to highlight work they thought would be relevant during the Copenhagen round of negotiations for a new climate change treaty. Of course, it didn’t hurt that most of the mainstream economics establishment is in the dog-house after two or three market bubbles have burst.