Elinor Ostrom and the Tragedy of the Commons
<http://volokh.com/2009/10/12/elinor-ostrom-and-the-tragedy-of-the-commons/>
Ilya Somin <http://volokh.com/author/ilya/> . October 12, 2009 11:08 pm
I was very happy to hear about Elinor Ostrom's Nobel Prize in Economics.
Her work focuses on the tragedy of the commons
<http://en.wikipedia.org/wiki/Tragedy_of_the_commons> and collective
action problems
<http://en.wikipedia.org/wiki/The_Logic_of_Collective_Action>, which
overlaps several of my own research interests. When Ostrom began writing
in this field in the 1960s, the conventional wisdom in economics and
political science was that the tragedy of the commons and other similar
collective action problems could only be addressed through government
intervention. Some dissenting economists (such as Ronald Coase) argued
that they could often be addressed through privatization -- converting
common property into property owned by individuals, who would then have
strong incentives not to overuse or destroy it. In a series of
influential articles and books, Ostrom showed that there is a third way:
often individuals can use social norms and informal institutions to
manage common property resources and prevent tragedies of the commons.
In many situations, Ostrom demonstrates, informal, decentralized
approaches to managing common property resources are superior to
government-imposed ones. The former take more account of the specialized
local knowledge possessed by the people who actually use the resources
and depend on them for their livelihoods.
For the best summary of Ostrom's work, see her excellent 1990 book
/Governing the Commons/
<http://www.google.com/url?sa=t&source=web&ct=res&cd=1&ved=0CA0QFjAA&url=http%3A%2F%2Fwww.amazon.com%2FGoverning-Commons-Evolution-Institutions-Collective%2Fdp%2F0521405998&ei=x-jTSqeZA5Xe8QbGlNH9DA&rct=j&q=governing+the+commons&usg=AFQjCNGPCTAci3BtT69QPJfFTsnQvgk9gg>.
Ostrom's theories are often seen as an alternative to traditional
libertarian thought, which emphasizes the importance of private property
and markets. However, it actually fits well with libertarianism defined
more broadly as advocacy of the superiority of private sector
institutions over government. In some respects, Ostrom's norm-based
approach to dealing with tragedies of the commons is actually less
dependent on government than the more traditional libertarian approach
of relying on exclusive private property rights. The latter, after all,
often depend on enforcement by government. Even where private property
rights exist, it is often easier and cheaper to solve some collective
action problems by norms rather than relying on the law. And, obviously,
Ostrom's emphasis on the importance of local knowledge is similar to the
earlier work of libertarian theorist F.A. Hayek
<http://www.volokh.com/posts/1217058723.shtml>.
Not all tragedies of the commons can be solved by the kinds of
mechanisms studied by Ostrom. Her research shows that such approaches
usually work well only in groups with no more than a few thousand
members. Beyond that point, resource usage norms become hard to enforce
and free-riding difficult to suppress. Informal norms and institutions
probably cannot solve nationwide collective action problems such as
rational political ignorance (the focus of much of my own work
<http://ssrn.com/abstract=916963>), or worldwide ones such as global
warming. Still, they can address a great many environmental and economic
dangers that most experts once believed required government-imposed
solutions.
Because Ostrom is a political scientist, her work hasn't been as widely
recognized by economists as it probably should be; this despite the fact
that collective action problems are a major focus of study for modern
economics. Steve Levitt
<http://freakonomics.blogs.nytimes.com/2009/10/12/what-this-years-nobel-prize-in-economics-says-about-the-nobel-prize-in-economics/>
writes that he had not even heard of Ostrom before she won the Nobel.
However, her work has been enormously influential in political science
and legal scholarship.
I'm not going to argue the question of whether Ostrom deserves the Prize
more than various other candidates who are professional economists.
Other people are far better qualified to judge that issue than I am.
However, there is no doubt that her work is a major contribution to the
study of important economic issues. Hopefully, the Nobel will make her
scholarship better known in economics and other fields.
UPDATE: Paul Krugman admits
<http://krugman.blogs.nytimes.com/2009/10/12/an-institutional-economics-prize/>that
he, like Levitt, was unfamiliar with Ostrom's work before she won the
prize. But he goes on to suggest that she is deserving of the award
based on her work on institutions.
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