Elinor Ostrom passed away last week. She was the first, and remains the only, woman to win the Nobel Prize in Economics. Her recognition stands out again due to her training in Political Science and the relative lack of mathematical modelling in her work. Over the last week there has been tons of attention paid to her passing (see here, here, here, here and here), which speaks to either her tremendous influence in the social sciences or the closedness of my intellectual circle — I’ll let the reader decide. I had wanted to write something last week, but wanted to make sure I got the chance to re-read some of her work before.
Ostrom was best known for her research on common-pool resources (CPRs). She positioned herself against the tradition established by Garrett Hardin in 1968 with his extremely influential article “The Tragedy of the Commons.” Hardin, as well as many after him, argued that when individuals face a resource that is both non-excludable (once access is provided to some, it is very difficult to exclude others) and subtractable (an individual’s use of the resource means that another can’t use that same portion of the resource), an incentive exists for individuals to overuse the it (the CPR) and thus deplete it. Scott Gordon’s analysis of a resource’s “maximum sustainable yield” is another, perhaps more sophisticated, analysis of this same problem — where individuals face an individual cost-benefit curve that intersects the maximum sustainable yield curve beyond its sustainable point. The standard economic models that grew out of these analyses argued that overcoming the incentive to overuse and deplete a common resource necessitated outside intervention (ie, the State) and/or instituting well-defined property rights.
Ostrom’s research challenged this approach towards managing the commons. Ostrom explained how communities around the world have developed a diverse array of institutions, policies, rules, norms and systems to cope with the complex task of managing the commons. Continue reading