Oxford's Econ. is actually very prestigious, that's why. Perhaps it's not as well known on this newsgroup due to Oxford not having a single honours Econ. degree at undergrad level. There have been no less than 9 Nobel Prize winners in Econ. associated with Oxford. Also, for journal citations, and this is what the LSE uses to show that it has the best Econ. dept in Europe, Oxford is 2nd place -ahead of Cambridge. Overall, for journal citations, the difference between Oxford and LSE is negligible. Also, Oxford has an excellent MPhil programme from which many people transfer onto the DPhil, so that too is one of its attractions.
I'v just got offer to do MPhil in Econ in Oxford, but I won't hav enough funding to continue to DPhil after the 2 years and so hav to work 4 several years before returning, do you know whether the MPhil is seen as a stand-alone Master in the job-market? Or it's just another half-way-house same as 1-year Masters in other unis, disliked by most employers?