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Vernon Smith on Elinor Ostrom
Vernon, of course, knows Ostrom's work well:
Relentlessly, Ostrom has pursued answers to two questions:
(1) Since "everybody's property is nobody's property," how is it that there are so many cases where collectives of ordinary people with no education and with none of the economists' knowledge of "the tragedy of the commons," in fact discover ingenious rules (institutions) for taking the "tragedy" out of a productive resource they hold in common? If you read her book you will find among the diversity of examples a Swiss village whose people have private property in the plots they plant and harvest, but also have a communal summer meadow for grazing their cows. One rule, still enforced, dating back to 1517 states that "no citizen could send more cows to the alp than he could feed during the winter." Wintering a cow is costly, and this rule rations access to the commons by tying it to private property rights....
(2) As a distinguished political-economic scientist she will be the first to tell you that there are also plenty of commons problems that represent institutional failures and fragilities; she has asked why, and what makes the difference between success and failure? The fragilities include inshore fisheries and groundwater basins with continuing commons problems; failures include salt water fisheries and irrigation systems hamstrung by the complexity of the rules.
Success is associated with clarity in the definition of and bounds on individual rights (and opportunities) to take action, and the geography of the commons; details for monitoring, operations, sanctions and mechanisms for conflict resolution emerge from within the collective and out of motivated people's direct experience with environmental context and each other. When too many of these problem-solving elements fail, the governance systems fail or require continuing attention to their fragility characteristics. A fatal source of disintegration is the inappropriate application of uninformed external authority, including intervention to prevent application of efficacious rules to political favorites. Also detrimental to good solutions is the OPM (other people's money) problem.
...Ostrom brings a distinct style in applying her skill in different methodologies. She blends field and laboratory empirical methods, economic and game theory, the really important ingredient of scientific common sense, and she constantly challenges her own understanding by looking at new potentially contrary evidence and designing new experiments to challenge her understanding of the emergent historical rules and the theory used to explicate them.
Posted by Alex Tabarrok on October 13, 2009 at 07:01 AM in Current Affairs, Economics | Permalink
Comments
Maybe some here can help me understand something that has been puzzling me about Ostrom.
I think she is a great choice for the prize, but what I am wondering about are some relatively recent publications/comments she has made about being optimistic about the ability to provide the global public good of climate change mitigation (i.e. protection of the global common pool resource of certain atmospheric services). It seems to me that the climate problem categorically does not meet Ostrom’s prerequisites and it is thus difficult to understand what her optimism is grounded in. The problem is not that no global commons problem can adequately approximate the prerequisites (e.g. I would say the ozone problem did/does to a much larger extent), but rather that the particulars of the climate problem should generate strong pessimism if we follow Ostrom.
Posted by: aaron_m at Oct 13, 2009 7:21:34 AM
Aaron: For one thing, I think Lin is an optimist by nature. For another, she views the climate problem not just from the top down, but also from the bottom up. She thinks a possible solution lies in nested institutions with local, small-scale collective action an important part of any solution. One thing she is not is naive about the scale of the problems climate change poses.
As for Vernon's comments, I wish they would be read by every ignorant economist who was spouting off on the Web yesterday about "Who's Elinor Ostrom? How can she have done anything important if I've never heard of her?"
Posted by: dan cole at Oct 13, 2009 7:54:28 AM
The tragedy of the commons problem is by definition non-exclusionary: it is a commons because its participants cannot control the behavior of other participants. If the participants are capable of enforcing a rule like "no citizen could send more cows to the alp than he could feed during the winter", then there is no commons problem to begin with. Someone has to be enforcing the per-participant limit on cows; this entity may as well be a rentier. At least then there would be no distortion towards investment in wintering facilities (for example).
Olstrom herself seems to place far stricter limits on applicability than I've mentioned seen so far, e.g.:
Effective commons governance is easier to achieve when (i) the resources and use of the resources by humans can be monitored, and the information can be verified and understood at relatively low cost (e.g., trees are easier to monitor than fish, and lakes are easier to monitor than rivers) (29); (ii) rates of change in resources, resource-user populations, technology, and economic and social conditions are moderate (30–32); (iii) communities maintain frequent face-to-face communication and dense social networks—sometimes called social capital— that increase the potential for trust, allow people to express and see emotional reactions to distrust, and lower the cost of monitoring behavior and inducing rule compliance (33–36); (iv) outsiders can be excluded at relatively low cost from using the resource (new entrants add to the harvesting pressure and typically lack understanding of the rules); and (v) users support effective monitoring and rule enforcement (37–39). Few settings in the world are characterized by all of these conditions. The challenge is to devise institutional arrangements that help to establish such conditions or, as we discuss below, meet the main challenges of governance in the absence of ideal conditions (6, 40, 41).
Posted by: david at Oct 13, 2009 8:24:59 AM
David: The original tragedy of the commons article by Hardin described exactly the same situation that Ostrom was looking at in Switzerland - only lacking the effective governance situation the peasants there had set up.
What makes monitoring and sanctioning possible - I think that would be another one of Ostrom's contribution - is much more the local institutions than the specific issue at hand.
Posted by: Sebastian at Oct 13, 2009 11:17:50 AM
Miss Olstrom's saying something very simple: if you have societal cohesion, problems like "tragedies of the commons" can be solved. But "institutional arrangements" cannot substitute for societal cohesion. That depends on language, ideology, traditions and even ethnicity. Acknowledging the need for and, even more, fostering such cohesion are so unlikely in today's political climate that I fear "strong pessimism" is fully justified.
Posted by: Robert Speirs at Oct 13, 2009 11:29:28 AM
"no citizen could send more cows to the alp than he could feed during the winter." I understand that that was a common rule of many Commons in medieval (and later) England. It would be enforced by the Manor Court. Those manor courts dominated by the commoners tended to apply it more firmly than those dominated by the Lord of the Manor.
Posted by: dearieme at Oct 13, 2009 11:54:50 AM
Effective commons governance is easier to achieve when (i) ... (v)
Reading this list, it almost sounds like the "cure" is worse than the disease, if back-to-the-future means old-boys networks, guanxi, cartels, provincialism and mistrust of outsiders, resistance to disruptive and innovative technological change, a world where who you know or who your parents were is more important than your character or ability, rule of law and equal opportunity is trumped by hoary traditions, and so forth.
Maybe I'm reading too much into it, but some elements of this program sound like a sinister throwback to old ways that we spent centuries trying to overcome.
The challenge is to devise institutional arrangements that help to establish such conditions...
How about no?
Posted by: anonymous at Oct 13, 2009 12:14:03 PM
Dan,
I was hoping that the optimism was based in research results.
The argument for multi-level nested systems is of course relevant to the climate problem, but really the relevance of the actual research is only at a very general level at best. What I am interested in what Ostrom's research results can tell us/help us understand about the large scale global cooperative challenges climate change mitigation gives rise to.
Posted by: aaron_m at Oct 13, 2009 12:49:19 PM
Like Jared Diamond in "Collapse," Elinor Ostrom has pointed out the problems for effective commons management caused by ethnic diversity.
http://isteve.blogspot.com/2009/10/elinor-ostoms-economics-nobel-prize.html
For example, if you show up in a New England lobstering village, where tradition dictates which families can do how much lobstering when, and announce you are going into the lobstering business, unless you've married into a local family, you'll find your boat at the bottom of the marina the next morning.
A classic case: American shrimp fishermen in Texas were universally denounced as racists in the late 1970s when they resisted the government's efforts to encourage Vietnamese refugees to become shrimpers in their waters. French director Louis Malle made a movie, Alamo Bay, denouncing ugly Americans fighting hardworking immigrants.
What got lost in all the tsk-tsking is that fishing communities always resist newcomers, especially hardworking ones, because of the sizable chance that the outsiders who don't know the local rules or don't care about them will ruin the ecological balance and wipe out the stocks of fish.
Posted by: Steve Sailer at Oct 13, 2009 1:37:29 PM
Jared Diamond's "Collapse" illustrates how ethnic diversity makes environmental cooperation more difficult. He praises the Dutch as the most cooperative nation on earth and attributes their awareness of and willingness to tackle problems to their shared memory of the 1953 flood that drowned 2,000 Netherlanders living below sea level. (Unfortunately, he doesn't mention whether Holland's rapidly growing immigrant Muslim population remembers when the dikes failed 52 years ago.)
Diamond notes that there are three possible solutions to what Garrett Hardin called "the tragedy of the commons," or the tendency for individuals to over-consume resources and under-invest in responsibilities held in common, leading to ecological collapse.
* Government diktat.
* Privatization and property rights -- but that's impractical with some resources, such as fish.
* "The remaining solution to the tragedy of the commons is for the consumers [i.e., harvesters of the resource] to recognize their common interests and to design, obey, and enforce prudent harvesting quotas themselves. That is likely to happen only if a whole series of conditions is met: the consumers form a homogeneous group; they have learned to trust and communicate with each other; they expect to share a common future and to pass on the resource to their heirs; they are capable of and permitted to organize and police themselves; and the boundaries of the resource and of its pool of consumers are well defined."
Needless to say, mass immigration from the Third World works against all those characteristics.
Posted by: Steve Sailer at Oct 13, 2009 2:32:24 PM
Oh brother. Leave it Steve Sailer to try to turn Ostrom into Lou Dobbs or worse.
She makes clear that these trust networks are linked to social capital. Certainly we know
that fishing villages tend to be very insular and do not like outsiders of any sort, even
including people of their same ethnicity. This is not strictly a matter of immigration, Steve,
even though you are like the person with a hammer who thinks everything you see is a nail.
The leading expert on social capital is Robert Putnam. He distinguishes "bonding" social
capital from "bridging" social capital. The first is the sort tied to ethnic insularity and
only trusting a narrow group of insiders, however defined. "Bridging" is tied to more
general social trust across groups. The evidence is strong that it is the latter that is
more favorable for economic growth than the former.
Posted by: Barkley Rosser at Oct 13, 2009 3:29:02 PM
Robert Putnam?
Nail, meet hammer!
"In the presence of [ethnic] diversity, we hunker down. We act like turtles. The effect of diversity is worse than had been imagined. And it’s not just that we don’t trust people who are not like us. In diverse communities, we don’t trust people who do look like us." — Harvard professor Robert D. Putnam
It was one of the more irony-laden incidents in the history of celebrity social scientists. While in Sweden to receive a $50,000 academic prize as political science professor of the year, Harvard’s Robert D. Putnam, a former Carter administration official who made his reputation writing about the decline of social trust in America in his bestseller Bowling Alone, confessed to Financial Times columnist John Lloyd that his latest research discovery—that ethnic diversity decreases trust and co-operation in communities—was so explosive that for the last half decade he hadn’t dared announce it “until he could develop proposals to compensate for the negative effects of diversity, saying it ‘would have been irresponsible to publish without that.’”
In a column headlined “Harvard study paints bleak picture of ethnic diversity,” Lloyd summarized the results of the largest study ever of “civic engagement,” a survey of 26,200 people in 40 American communities:
When the data were adjusted for class, income and other factors, they showed that the more people of different races lived in the same community, the greater the loss of trust. ‘They don’t trust the local mayor, they don’t trust the local paper, they don’t trust other people and they don’t trust institutions,’ said Prof Putnam. ‘The only thing there’s more of is protest marches and TV watching.’
Lloyd noted, “Prof Putnam found trust was lowest in Los Angeles, ‘the most diverse human habitation in human history.’”
As if to prove his own point that diversity creates minefields of mistrust, Putnam later protested to the Harvard Crimson that the Financial Times essay left him feeling betrayed, calling it “by two degrees of magnitude, the worst experience I have ever had with the media.” To Putnam’s horror, hundreds of “racists and anti-immigrant activists” sent him e-mails congratulating him for finally coming clean about his findings.
Lloyd stoutly stood by his reporting, and Putnam couldn’t cite any mistakes of fact, just a failure to accentuate the positive. It was “almost criminal,” Putnam grumbled, that Lloyd had not sufficiently emphasized the spin that he had spent five years concocting. Yet considering the quality of Putnam’s talking points that Lloyd did pass on, perhaps the journalist was being merciful in not giving the professor more rope with which to hang himself. For example, Putnam’s line—“What we shouldn’t do is to say that they [immigrants] should be more like us. We should construct a new us”—sounds like a weak parody of Bertolt Brecht’s parody of Communist propaganda after the failed 1953 uprising against the East German puppet regime: “Would it not be easier for the government to dissolve the people and elect another?”
Before Putnam hid his study away, his research had appeared on March 1, 2001 in a Los Angeles Times article entitled “Love Thy Neighbor? Not in L.A.” Reporter Peter Y. Hong recounted, “Those who live in more homogeneous places, such as New Hampshire, Montana or Lewiston, Maine, do more with friends and are more involved in community affairs or politics than residents of more cosmopolitan areas, the study said.”
http://www.amconmag.com/article/2007/jan/15/00007/
Posted by: Steve Sailer at Oct 13, 2009 4:17:25 PM
A quick Google search finds Nobel Laureate Elinor Ostrom, like Jared Diamond, also cautiously expressing Doubts About Diversity in her book "The Drama of the Commons."
" ... Alesina et al. (1999) find that ethnic diversity is associated with lower public goods funding across the U.S. municipalities because different ethnic groups have different preferences over the type of public good ... In the kind of rural societies considered in this chapter ... the effectiveness of social sanctions weakens as they cross ethnic reference groups. In this vein, Miguel (2000) constructs a theoretical model where the defining characteristics of ethnic groups are the ability to impose social sanctions within the community against deviant individuals and the ability to coordinate on efficient equilibria in settings of multiple equilibria. With data from the activities of primary school committees in rural western Kenya, Miguel then shows that higher levels of ethnic diversity are associated with significantly lower parent participation in parent meetings, worse attendance at school committee meetings, and sharply lower teacher attendance and motivation.
"If social groups (not solely ethnic groups) are defined as those whose boundaries coincide with the effective monitoring and enforcement of shared social norms ... this is one way of understanding the notion cited earlier of cultural homogeneity, a variant of what many authors have called social capital or social cohesion. ... Irrigation organizations that cross village boundaries can rely less on social sanctions and norms to enforce cooperative behavior ..."
There are basically two ways to get people to play nice with a common resource such as shrimp or irrigation water: violence or ostracism. The latter works most effectively regarding marriage -- if you don't play by the rules, nobody respectable will let your kid marry his daughter. But when newcomers who don't ever want their children to marry your children arrive and start exploiting your irrigation system or fishery (or whatever), then the old non-violent traditions break down, and people start turning to violence or its threat, whether anarchic or government-based (e.g., socialism and property rights are based on the threat of the government's monopoly on violence).
Posted by: Steve Sailer at Oct 13, 2009 4:29:46 PM
Sailer,
The point is not that people are a bunch of bigots and racists. The point is that societies function
better that have the non-bigoted "bridging" social capital than the "bonding" social capital that we
all know is hot stuff in many places.
Sorry, your hammer just hit your thumb, and pretty hard.
Posted by: Barkley Rosser at Oct 13, 2009 5:30:58 PM
Thanks, Barkley, for validating the stereotype of the shipwrecked economist with the unopened can of beans: "Assume we have "bridging capital" ...
Posted by: Steve Sailer at Oct 13, 2009 5:48:20 PM
Sailer,
Some societies have more of it than others. This has been measured and the data is available and the studies have been done. This involves actual empirical analysis, not bullshit theory. Do not try to hang that silly stuff on me, you will not get anywhere other than wearing a dunce cap.
Posted by: Barkley Rosser at Oct 13, 2009 8:13:42 PM
Barkley says:
"Some societies have more of it than others."
Indeed.
Posted by: Steve Sailer at Oct 13, 2009 10:53:47 PM
Ah, Swiss alpine management: "a Swiss village etc." Restrictions on cowholding to the number that can be wintered on the owner's hay resources is only the tip of that iceberg. Swiss villages, especially the alpine ones that practiced "elevage", that is, multi-altitude grazing involving mountain pastures, evolved a rich variety of complex mechanisms to protect from overgrazing, to allocate access to meadows and access to the resulting products, and to determine boundaries between economic groups. These systems often involved obligatory shared labor according to various distribution methods, as well.
Additionally, these systems required record-keeping of considerable sophistication. The output of each cow on a communal alp might be recorded on one, two or even more "Stichtage" (measurement days), and the results multiplied by the number of days the cow was on the alp, leading to a percentage of the total cheese and butter produced, when it was brought down in the fall -- or various short-term balance accounts could be maintained for who had provided milk to whom (since one owner's cows were usually not enough to make a whole cheese on a given day), so that each owner could make whole cheeses, in proportion to his cows' share of the total milk produced.
In English, there's not much, though Ben Barber gives a highly idealized version in his first book. In German, the most recent and richly comparative work is by Jon Mathieu, whose _History of the Alps_ has just been translated (West Virginia UP). More detailed is his earlier study, _Eine Agrargeschichte der Inneren Alpen_. But to get the full richness of the systems that developed, you have to go to the ethnohistorians of the late 19th century to the 30s, for example Richard Weiss, whose _Das Alpwesen Graubündens_ was reprinted a few years ago. There's an equivalent literature on the Valais, but I don't know the authors off the top of my haead.
Notably, complex commons management could go hand in hand with hard-as-nails defense of property rights. For a nice example from the late 15th and early 16th century, DePlaze's _Alpen, Grenzen, Pässe_ considers the legal and political aspects. More generally, some alps (the meadows!) were owned by communes or sections of communes; some were owned by individuals or proto-corporations; and some were "allmend", or commons of the more traditional sense.
The reader, having perused this material, may then expand on the simple idea that villages could set up self-restricting use of commons, or may come back for more reading material and citations :-)
(Just remember: there are experts in _everything_, and middelmen who can provide access to them...)
Posted by: PQuincy at Oct 14, 2009 10:47:03 PM
Barkley Rosser is a good reminder that while there are honest leftists, there is no such thing as an honest liberal.
Posted by: Beefcake the Mighty at Oct 16, 2009 5:48:41 PM
Great thread, the commons can be nested with other commons and diversity made into a strength, in Peru the various indigenous groups have built an impressive political organisation Aidesep to defend their common propery in the Amazon, under threat from oil corporations and Alan Garcia's Peruvian government.
http://www.thecornerhouse.org.uk/item.shtml?x=52004#index-01-00-00-00
is a good summary of Ostrom's work, which is very important and stimulating.
Posted by: Derek Wall at Oct 17, 2009 8:30:29 AM
