Elinor Ostrom and the well-governed commons

by on October 12, 2009 at 8:10 am in Current Affairs, Economics, Political Science | Permalink

Elinor Ostrom may arguable be considered the mother of field work in development economics.  She has worked closely investigating water associations in Los Angeles, police departments in Indiana, and irrigation systems in Nepal.  In each of these cases her work has explored how between the atomized individual and the heavy-hand of government there is a range of voluntary, collective associations that over time can evolve efficient and equitable rules for the use of common resources.  

With her husband, political scientist Vincent Ostrom, she established the Workshop in Political Theory and Policy Analysis in 1973 at Indiana University, an extraordinarily productive and evolving association of students and professors which has produced a wealth of theory, empirical studies and experiments in political science and especially collective action.  The Ostrom's work bridges political science and economics.  Both are well known at GMU since both have been past presidents of the Public Choice society and both have been influenced by the Buchanan-Tullock program.  You can also see elements of Hayekian thought about the importance of local knowledge in the work of both Ostroms (here is a good interview).  My colleague, Peter Boettke has just published a book on the Ostrom's and the Bloomington School.

Elinor Ostrom's work culminated in Governing the Commons: The Evolution of Institutions for Collective Action which uses case studies to argue that around the world private associations have often, but not always, managed to avoid the tragedy of the commons and develop efficient uses of resources.  (Ostrom summarizes some of her findings from this research here).  Using game theory she provided theoretical underpinnings for these findings and using experimental methods she put these theories to the test in the lab. 

For Ostrom it's not the tragedy of the commons but the opportunity of the commons.  Not only can a commons be well-governed but the rules which help to provide efficiency in resource use are also those that foster community and engagement.  A formally government protected forest, for example, will fail to protect if the local users do not regard the rules as legitimate.  In Hayekian terms legislation is not the same as law.  Ostrom's work is about understanding how the laws of common resource governance evolve and how we may better conserve resources by making legislation that does not conflict with law.

CuriousEconomist October 12, 2009 at 8:38 am

Alex, you are the first person I’ve read to mention, and indeed stress (justifiably so), Ostrom’s contributions to development economics! I would summarize (if one can do so) her work as an acknowledgment, and promotion, of the role of institutional diversity in economic development.

M.G. in Progress October 12, 2009 at 9:00 am

The Nobel is for Economic Sciences but Mrs Ostrom is professor in Political Science with:

B.A. (with honors), Political Science, UCLA, 1954
M.A., Political Science, UCLA, 1962
Ph.D., Political Science, UCLA, 1965

Are economists happy?

M.G. in Progress October 12, 2009 at 9:20 am

I know, it’s a matter of definition and whether the Nobel Prize is in Economics or is an award for outstanding contributions in the field of economics. She is the first female although there were few female candidates.

anonymous October 12, 2009 at 9:27 am

It’s not the first time that a non-economist has won. Technically, I don’t even think Ronald Coase had a PhD in economics but I may be wrong on that (wikipedia says he got a “higher doctorate”). Of course, there’s Kahneman who was a psychologist, which is far more left of field. But prospect theory is almost established as the canonical model in decision theory (not quite, as vnm is still that base model, but close).

Brian Moore October 12, 2009 at 9:50 am

“A formally government protected forest, for example, will fail to protect if the local users do not regard the rules as legitimate.”

This seems like a fascinating point — has she (or anyone else) done more on this on a wider scale? Like we all know that adherence to drug laws are driven widely by whether or not the person believes they are legitimate. An even better example might be copyright protection. How do we expect the subsequent effects of policy to be changed based on how legitimate people believe it to be? And more specifically, the people it directly affects. How do we track the results of laws that may be just mandating that people do something they wanted to do anyway?

bob tollison October 12, 2009 at 10:26 am

Nice job, Alex. She was influential in early public choice movement.

passerby October 12, 2009 at 10:40 am

I wonder how her findings also support the new left’s idea of participatory democracy, who tends to be small scale in their ideals, in contrast to the current large corporation dominated economy.

Ed Lopez October 12, 2009 at 10:43 am

Thanks for the informative post, Alex. Both awards reflect the importance of emergent institutions, and both support non-coercive governance solutions. Bravo.

John Thacker October 12, 2009 at 11:08 am

And, it’s better anyway than having someone with a Ph.D in math like Nash, don’t you think?

The same sort of argument applies to both. There’s not a prize in Mathematics, either, and Nash’s work was certainly important– you can’t argue that his work on game theory was ridiculous technical out-there macro modeling or useless mathematics.

The Chemistry and Medicine prizes get used for Biologists a lot too, since there is no Biology prize. Sometimes chemists get annoyed at this too.

the buggy professor October 12, 2009 at 11:49 am

“a UK undergrad. degree is considerably more intensive than its US equivalent” — Gary Chartier

1) Suffix is right: it depends on the UK and US universities. I’m a graduate of Stanford, Oxford, and Harvard (Ph.D. from the latter in both economics and political science) — all three excellent universities. The undergrad work at Stanford was, if anything, more demanding than what I saw at Oxford. What “more intensive” could be re-written to mean accurately is this: British undergrad education, like its equivalents on the European Continent, is specialized from the word go.

Whether that’s desirable is another matter — such specialization at an early age.

.

2) Consider a good English friend of mine at Oxford who was accepted to do law-studies at the age of 18.

He hated the discipline, wasn’t interested in it, but could not switch to another discipline. He flunked his three-year exams the first time, passed the next year, and became a writer for the theater and eventually, moving to the US, has become one of New York’s most prominent theatrical critics.

.

3) Another English friend of mine, also a specialist in law studies — who was also the president of the Oxford Union debating society — passed the bar for a barrister career in London.

After two years, he was bored stiff. He entered Harvard Law School, where — the first time he was called on my a professor to stand up and answer a question about the cases they were studying — he, a very experienced debater, was flummoxed by the demanding question and reprimanded in class by the professor.

Afterwards, he applied himself with diligence; opted for the doctoral program at the law school; studied with some social scientists; and carried out path-breaking work on the effects of anti-discrimination laws in the Boston area. Soon afterwards, he was given a chair in urban studies at the University of London — and has done outstanding work ever since.

4) In my own political science classes at UC Santa Barbara, I’ve had several British students over the decades. They were bright and did well, but all of them whom I met with over coffee said they were surprised by how hard the classes were in our department.

..

5) I’ve also had experience as a student and professor in France, Germany, and Switzerland. My impression is that the UK universities are rightly regarded as of higher quality — not least in facilities, contacts with teachers, and a sense of personal well-being as a student — compared to the much larger, far more impersonal, much less well-endowed with library and other resources — than those on the Continent, with Swiss universities doing better on these scores than the built-in alienating campus-life (if that’s the right word) that exists in the huge, impersonal universities in France and Germany.

Whether that’s the case in the smaller West European countries of Scandinavia and Holland is another matter, about which I’ve no personal experience. It wouldn’t surprise me, though, if they did better than their French and German (or Italian and Spanish) equivalents on all the counts such mentioned.

Michael Gordon, AKA the buggy professor

Barkley Rosser October 12, 2009 at 12:18 pm

This award reflects influences of both Herbert Simon and Ronald
Coase. Simon was actually Williamson’s professor at Carnegie-Mellon.
Even though he got the economics Nobel, Simon did not like economics
and late in his career was in four departments at Carnegie-Mellon,
none of them economics (management, psychology, computer science, and
cognitive science).

In addition to Simon and Coase, Ostrom also reflects influence of
two other Nobelists, one with a strong Mason connection. One is
Nash, whom some are ridiculuing here. She has used game theory in
studying when and how people are able to cooperate to manage a common
property resource. She also has used experimental methods to study
these problems, thus drawing on the influence of Nobelist, Vernon Smith,
the “father of experimental economics,” and still officially on the
books at GMU, even though he is now more fully at Chapman.

CuriousEconomist October 12, 2009 at 12:39 pm

Nobody ridiculed Nash…

j October 12, 2009 at 1:12 pm

It was a very poor choice. She is a development economics, but development is not happening anywhere. She studied voluntary self-governing irrigation projects in the Third World, projects that have no centralized management nor private ownership, yet there no successful such projects in the real world. She caters to the leftist wishful thinking (or dreaming) NGO busybodies touring Africa, and the do-good wealthy Norwegian folks.

DanC October 12, 2009 at 2:12 pm

Alex thank for the links, She does seem to have expanded on Coase, extended his work to more examples.

I have never read her stuff before. A quick read does not suggest any political bias.

Just wondering what her work implies about financial regulation i.e. if traders do not see the value of regulations, imposed from outside by government for example, will traders quickly find ways around the regulations. Then how do you calculate the cost of enforcement. And if traders accept regulations how much of it is because the regulators were captured?

Wonder what she thinks of Stigler’s work?

agnostic October 12, 2009 at 4:38 pm

Can someone explain to the neophytes why Ostrom was chosen over other people who fleshed out Coase’s insights? Just from basic reading and listening to EconTalk, I know about Steven Cheung’s work on beekeepers & orchardists, and the Chinese coolies who hired a monitor with a whip to keep themselves working hard.

Those are early examples of internalizing an externality when transaction costs are low, and expanding into a firm when it’s too costly to transact with all your partners.

Is it just that Ostrom has piled up a much larger stack of such examples than other followers of Coase? Or was there some groundbreaking theoretical insight too? (The latter seems doubtful if most economists, who love theory, haven’t heard of her until now.)

Barkley Rosser October 13, 2009 at 12:15 am

I think it may be worth mentioning two people who made a crucial insight that underlies Ostrom’s work who have not
been mentioned at all in most of the commentary on this prize. They are S.V. Ciriacy-Wantrup (who I am not sure is
still alive) who was at Berkeley and Richard Bishop of the ag and applied econ department at the University of
Wisconsin-Madison. The big bugaboo long in the literature (and still in a lot of it) spoke of the “tragedy of
the commons,” mixing ownership and control of access issues. Gordon wrote of this in regard to fisheries in the
JPE in 1954, setting the stage, to be followed in the early 60s by Garret Hardin with his “Tragedy of the commons”
paper about the collapse of medieval grazing commons in Britain. The story was either there was common property
or there was private property, with nothing in between.

Ciriacy-Wantrup and Bishop wrote a paper published in 1975 in the ultra-obscure Natural Resources Journal that
exposed this dichotomy as baloney. They made it clear that it was control and management of access that was the
key, and noted the existence of commons that were being managed, with the Swiss alpine grazing grounds the classic
example, operating successfully (and untragically) on a system of access control dating to the 1200s. Likewise,
property rights without the ability to control access are worthless, as the 19th century Great Plains farmers with
no barbed wire understood as the cattle herds came crashing across their land, crushing their crops.

What makes Ostrom deserving of the prize over them (and also over Daniel Bromley, editor of Land Economics, who
also published a book in the same year she did (1990) making these same points, is that she pushed further on with
her own field studies and then established the experimental lab at Indiana to further examine how different
governance systems work. She took the insight and ran with it much further.

Jim Rose October 13, 2009 at 4:34 am

The comments about the political science background of Elinor Ostrom must be contrasted against the following.

Tullock took only one albeit very good class in economics, and he held professorships in political science and in law. He is tipped to win the prize every year.

Judge Richard Posner is another worthy Noble prize candidate despite his nearly 30 years on the federal appellant bench and professorships in law.

Presenting the commons as a potential opportunity for decentralised solutions based on mutual exchange policed by repeated interaction is a worthy contribution.

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Her work is based on impressive empirical work….very useful for showing how to maintain ecosystems and create prosperity.

Grand mother of the internet, the WWW and all that FOSS stuff…excellent news

a good account of her work here http://www.thecornerhouse.org.uk/item.shtml?x=52004

A new Adam Smith or Keynes or Marx….the world will be talking about her in two years time.

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It was quite common on Coase’s era, and after, for an English academic in the arts or the social sciences to receive a university appointment based solely on her or his undergraduate performance (a UK undergrad. degree is considerably more intensive than its US equivalent) and then, if her or his subsequent performance merited it, to apply for and obtain a “superior† or “higher† doctorate, while ignoring the PhD option entirely; it’s only been relatively recently that a competitive employment market has made it almost unavoidable for candidates for positions even in these areas to hold PhDs when applying.

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