Elinor Ostrom 1933-2012

Elinor Ostrom

2009 Nobel Prize press conference

Elinor Ostrom, winner of the 2009 Nobel Prize in economics, died today. She was the first woman to win the prize and a little bit of a reach outside the committee’s normal comfort zone of mathematical modeling.

Her best-known research has to do with management of the commons. Standard economic thinking about the commons focuses on the idea of a “tragedy” of the commons. The town has a patch of grass that’s the common possession of everyone who lives there. Everyone who owns sheep wants their sheep to eat some of the grass. And everyone who owns sheep has an interest in avoiding overgrazing in order to ensure that the grass will continue to be there for years to come. But since exercising personal restraint won’t stop you from overgrazing the commons, and my personal overgrazing won’t greatly exacerbate the overall problem it’s in each individual sheep-owner’s interest to just feed as much grass as possible to his sheep. In the end, the grass all ends up dead even though nobody wanted that outcome and it’s left everyone worse off.

The standard economist’s prescription is to evade the tragedy of the commons by creating well-defined property rights.

This is the idea behind cap-and-trade (viewing the atmosphere’s capacity to absord greenhouse gas emissions as a commons), behind tradeable catch shares for fishermen (viewing the fish as a commons), and behind congestion pricing (viewing highway space as a commons).

Now the issue Ostrom pointed out is that though you do see these tragedies occur, they’re not nearly as common as the basic tragedy of the commons analysis would suggest. What you might think of as “traditional” or “precapitalist” societies generally manage to handle these situations sustainably without shifting to a mode of well-defined property rights. Instead you have a communitarian system of management that typically limits access to some class of “insiders” while ensuring insider compliance with existing norms. Ostrom’s research on the commons focused on inquiring into the diverse array of systems for commons management that are in place, and the kind of external shocks that disrupt sustainable systems. Here’s a good video lecture of hers outlining some of the basics of her findings.