Institutional analysis

Institutional analysis is that part of the social sciences which studies how institutions—i.e., structures and mechanisms of social order and cooperation governing the behavior of two or more individuals—behave and function according to both empirical rules (informal rules-in-use and norms) and also theoretical rules (formal rules and law). This field deals with how individuals and groups construct institutions, how institutions function in practice, and the effects of institutions on each other, on individuals, societies and the community at large.

Since institutional analysis is focused on the systematic study of people's collective behaviour, its ability to explain major political, social, or historical events is sometimes contrasted with the use of conspiracy theory to explain such events, since the latter focuses on explaining such events by a secret, and often deceptive, plot by a covert coalition of small numbers of powerful or influential individuals rather than by the systematic, regular, publicly documented behaviour of groups of individuals.

The term institutional analysis is used by several academic disciplines, and has several meanings and connotations.

One meaning of institutional analysis refers to actual formal institutions. In the biomedical sciences, “institutional analysis” often refers to analyzing data coming from concrete institutions such as health authorities, hospitals networks, etc. Similarly, in the fields of education and public administration and governance studies, the term usually refers to how school boards and governmental agencies implement policies.

Another meaning refers to institutions as ways of thinking that have a direct impact on behaviors. Under this approach, there are several variations and usages of institutional analysis. In economics, it is used to explain why economic behaviors do not conform to the theory of supply and demand. This is a relatively old school of thought that has its roots in the work of early 20th-century economists like Pareto. One of the most prominent contemporary figures of institutional analysis in economics is Douglass North, who received the Nobel Prize for Economics in 1993.

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