Tragedy of the Commons: Why Do Shared Resources Get Misused?

In 1832, the British political economist William Forster Lloyd observed that cattle grazing on common land tended to be scrawnier than those raised in private enclosures. The "commons," Lloyd realized, were threatened by people's private interests and unwillingness to maintain the grass enclosure the way they would their private property.

Using Lloyd's concern about the "tragedy of the commons," ecologist Garrett Hardin wrote a famous 1968 article in Science magazine about the dangers of overpopulation. In Hardin's view, people are privately motivated to reproduce and consume scarce resources at an unsustainable level. Hardin brought concerns over the "commons" into the mainstream. Since then, the "tragedy of the commons" has served as a metaphor in political science and economics for instances when individuals might be motivated to deplete a shared resource at the expense of the community's long-term interests.

Some environmentalists argue that contemporary issues like global warming or endangered species make the "tragedy of the commons" more relevant than ever. They believe that industrial companies' willingness to emit dangerous levels of carbon dioxide or undermine species' natural habitats occur because capitalists do not personally bear the burden of pollution or resource exhaustion. Instead, these environmental costs are socialized and the planet suffers in the same way that the common English pasture was depleted. Environmentalists tend to advocate government intervention and regulation to prevent individuals from using up the community's resources.

In contrast, some libertarians argue that the "tragedy of the commons" can be addressed through the privatization of lands. The gist of this argument is that when people own their own property, they are motivated to preserve it. From the libertarian perspective, Lloyd's farming example illustrates that people sustain private property far better than socialized land. Thus, we should have less communal land, not more, if we want the earth to be well cared for.

A third view comes from Elinor Ostrom, the winner of the 2009 Nobel Prize in Economics, who spent much of her life's work studying the ways that local institutions can help people manage "common-pool" resources, such as fisheries or forests. In the spirit of Friedrich Hayek, Ostrom favors local, knowledge-based solutions and believes that people actually living in a particular environment can usually manage and sustain their resources better than planners or social engineers. At the same time, she is not opposed to public lands and communal efforts. In fact, much of her research emphasizes social cooperation and reciprocity. 

The tragedy of the commons is closely related to the idea of market failure, or the inability for the market to achieve economic efficiency and put resources to their best use. Like environmentalists who believe that the government can help us overcome the tragedy of the commons, market interventionists contend that the market's failure to adequately address issues like healthcare or national defense calls for more government control of the economy. Like the libertarians who favor private solutions over the commons, skeptics of market failure say that poorly functioning markets such as healthcare are actually the result of expensive state mandates or regulations.

Recently, scholars have also applied the tragedy of the commons to debates concerning intellectual property and technological data. For instance, with the expansion of digital technology, it has grown easier to duplicate intellectual property despite copyright laws. This can benefit more people, but potentially damage the profits of intellectual property creators.

The issue is similar for technical and medical innovation. Should every technological breakthrough be patented, because that breakthrough is the product of an individual or firm's personal intellectual and financial investments? Or does patent law prevent the free flow of information and therefore prevent future innovations ("tragedy of the anticommons")? For example, without a patent, once a pharmaceutical company develops a new drug, rival companies can easily manufacture that same product. On one hand, this seems unfair, since the drug may have taken many years and millions of dollars for the first company to develop. On the other hand, dispersing that knowledge can make the drug more affordable and easier to produce, potentially benefiting more people. In such ways, property in the digital age has actually become much harder to regulate than in the 19th century.

Though the specific issues may have changed, the philosophical problem of how people and communities best protect their private and communal resources remains a relevant topic for our day.

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In his textbook, Economics of the Public Sector, Joe Stiglitz categorizes market failures in general and those that exist in health care in particular. The following ... is based on his list, with a lot of my own thoughts added.

"Of course, in and of itself, this supply of natural resources is largely useless. What is important from the perspective of economic activity and production is the subset of natural resources that human intelligence has identified as possessing properties capable of serving human needs and wants and over which human beings have gained the power actually to direct to the satisfaction of their...

"The 'tragedy of the commons' metaphor helps explain why people overuse shared resources."

"One of the great tragedies of socialism has been the confounding of common rights (natural rights common to each individual) with collective rights (those that have been delegated to the community or its government). Common rights are inalienable, individual rights -- the very opposite of collective rights. Classical liberalism was based on the idea of common rights."

By drawing on various examples, the author explains how countries of the freest economies maintain the best environmental conditions and that capitalism is the most powerful tool for environmental conservation.

Somin summarizes Elinor Ostrom's contributions to the field of economics. 

Nothing follows from the fact that there is 'market failure.' To make the case for transferring decision making power to government one would have to show that the likely 'government failure' would be less harmful.

This post complements one yesterday that focused on market failures in health insurance.... It’s loosely based on the content of Economics of the Public Sector, by Joe Stiglitz.

"Before there were markets, there was social space, which is common space. Economists deem this realm a void, but in fact it was a teeming realm of productivity."

"What kind of framework encourages experimentation without at the same time perpetuating bad ideas? Here is one hypothesis: in societies that sustain progress over long periods, people are free to experiment at their own expense and free from having to pay for other people's bad ideas. This is the true test of a system of property.

...

"The theory here relates to market failure. Market failure occurs where resources are not allocated to their most efficient use. In the case of the environment the failure occurs because of the existence of negative externalities. Negative externalities are the effects on a third party of an economic decision. Businesses highlighted in the Environment Agency report...

"The basic idea of patents is a good one: an inventor is granted a limited monopoly (20 years, in America and elsewhere) over a technology in return for disclosing the details of its workings, so that others can build upon the invention. Advanced technologies are thus made widely available, rather than remaining trade secrets, spurring further innovation. In some industries, notably pharmaceuticals, it is doubtful that the huge investments needed to develop new products would be made without the prospect of patent protection."

"Property is a general term for rules governing access to and control of land and other material resources. Because these rules are disputed, both in regard to their general shape and in regard to their particular application, there are interesting philosophical issues about the justification of property. Modern philosophical discussions focus mostly on the issue of the justification of...

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Boaz discusses shark populations and why the ocean sometimes presents a tragedy of the commons. 

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"The 2009 Nobel Prize for economics is a useful reminder of how easy it is for scientists to go wrong, especially when their mistake jibes with popular beliefs or political agendas."

"Speedy Internet links, improved compression techniques, and fatter hard drives have dealt harshly with traditional views of copyright. From the ongoing courtroom wrangling over Napster's fate to the online swapping of pirated movies, our current copyright structure is being stretched and tested by unforeseen technologies."

"Nobel Prize-winning economist Elinor Ostrom proved that people can—and do—work together to manage commonly-held resources without degrading them."

This encyclopedia entry explains the basic idea behind the Tragedy of the Commons. Historically, England's public pastures were in far worse condition than private lands. This was because each individual using the public space was guided by self-interest to exploit the area, while the responsibility for maintaining the area was shared by the entire community.

Hardin tells us, "...

Drezner discusses the tragedy of the commons in the context of global politics and the problem of setting international rules. 

Chart or Graph

A Framework for Institutional Analysis.

Contextual payoff table for the prisoner's dilemma.

A helpful way to analyze institutional rules.

Diagram of four types of goods and their relative sustainability.

A graph of Hardin's Common Pasture.

Analysis Report White Paper

Market failures associated with environmental pollution interact with market failures associated with the innovation and diffusion of new technologies.

Global sustainable use of natural resources confronts our society as a collective action problem at an unprecedented scale. Past research has provided insights into the attributes of local social-ecological systems that enable e ffective self-governance.

This paper is a study of collective action in asymmetric access to a common resource. An example is an irrigation system with upstream and downstream resource users. While both contribute to the maintenance of the common infrastructure, the upstream participant has first access to the resource.

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Rothbard explains why whether or not we consider the law to be normative affects what we think about property and its possible environmental side effects.

"Six years ago in Science, Michael Heller and Rebecca Eisenberg asked the disarmingly simple question whether patent protection could deter biomedical research.... They treated patent protection as a two-edged sword. Happily, patents spur innovation by securing to inventors the fruits of their labors. Unhappily, patents also create a vast thicket that gives each patent holder a potential veto right over the innovations of others. This last risk they dubbed the tragedy of the anticommons, which results when property rights are too strong instead of too weak, as in the traditional tragedy of the commons."

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"[I]n the modern age we have substituted collective decision-making for individual decision-making with respect to many environmental issues. This change in turn has created perverse incentives that (ironically) have led to environmental harm."

Much of the literature on the tragedy of the commons focuses on saving the global commons through increased centralization and regulation, at the expense of the individual's autonomy and psychological sense of community.

Socialism can be looked upon as a fourth potential strategy for avoiding Garrett Hardin's 'tragedy of the commons.' The other three are social pressure, regulations, and division of the resource into private sections.

The authors present Elinor Ostrom's Nobel-Prize winning work on "the commons" and human institutions in textbook format.

Rose contrasts the classical economic view of property with more ancient and contemporary ideas for public or collective land ownership.

Hardin's tragedy is about the commons looking in; intellectual property is about looking out from existing commons to more expansive horizons. I enunciate this difference in what I call the 'fable of the commons,' a narrative device that illustrates the relevance of the concept of the commons for intellectual property.

Competition among scientists for funding, positions and prestige, among other things, is often seen as a salutary driving force in U.S. science. Its effects on scientists, their work and their relationships are seldom considered.

Output per worker varies enormously across countries. Why? Our analysis shows that differences in governmental, cultural, and natural infrastructure are important sources of this variation.

Garrett Hardin's essay 'The Tragedy of the Commons' has remained controversial, but it has inspired a vast number of theoretical, experimental, and empirical contributions that have clarified the mechanisms of collective action problems and suggested ways to overcome these. This article reviews the recent game-theoretic research in this field.

Crowe's is one of the most famous responses to Hardin's 1968 essay on the "Tragedy of the Commons."

In the study of conflicts, both economists and evolutionary biologists use the concepts 'tragedy of the commons' and 'public goods dilemma'. What is the relationship between the economist and evolutionist views of these concepts?

"There are many reasons why it is alleged that markets fail. One reason is due to the existence of 'externalities.'"

The authors apply the idea of the "anticommons" to their observation that taxes on wireless services are disporportionately high.

Video/Podcast/Media

"Lecture by Walter Block given to the 1990 ISIL World Libertarian Convention.

Walter Block, an Austrian school economist and anarcho-libertarian philosopher, is Harold E. Wirth Eminent Scholar Chair in Economics and professor of economics at Loyola University New Orleans and senior fellow with the Ludwig von Mises Institute. He is the author of the books Defending the Undefendable;...

"In economic activity, there are sometimes 'externalities' or spillover effects to other people not involved in the original exchange. Positive externalities result in beneficial outcomes for others, but negative externalities impose costs on others. Prof. Sean Mullholland at Stonehill College addresses a classic example of a negative externality, pollution, and describes three possible...

"Elinor Ostrom explains how people can use natural resources in a sustainable way based on the diversity that exists in the world."

A dedicated, unabashed, free market capitalist, T. J. Rodgers takes a businessman's and engineer's view of global warming.

"People living together must find some way to preserve common resources. Unfortunately, there are strong incentives for people to exploit these resources when they are held in common by everyone. As Prof. Sean Mulholland at Stonehill College explains, the 'tragedy of the commons' occurs when individuals acting independently end up depleting shared resources, such as fisheries or pastureland....

Primary Document

This work is George's critique of the political philosopher Herbert Spencer, who, in Social Statics, had erroneously substituted the idea of collective rights with common rights.

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In her 2009 Nobel speech, Ostrom discusses her work on polycentric systems and peoples' diverse strategies for governing common-pool resources.

 

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"The recent enactment of the Leahy-Smith America Invents Act (AIA), P.L. 112-29, suggests congressional interest in patents on diagnostic methods."

"The former book of these commentaries having treated at large of the jura personarum, or such rights and duties as are annexed to the persons of men, the objects of our inquiry in this second book will be the jura rerum, or those rights which a man may acquire in and to such external things as are unconnected with his person. These are what the writers in natural law style the rights of...

"Perhaps Henry George's best known work in which he examines the causes of poverty and, among other things, blames it on the monopoly of land ownership."

Paul Aligica interviews Vincent and Elinor Ostrom on their lifetime work concerning the terms of choice and the role of institutions. 

Because the proposed free-trade agreements would be of substantial benefit to the economies of small developing countries while having little effect on the U.S. economy (and a beneficial effect at that), they provide a relatively easy way for the United States to help such countries.

In this chapter, taken from Spencer’s first major work of political philosophy, he questions the theory of private property.  

Locke's Second Treatise develops his descriptions of the state of nature along with natural law. His work was extremely influential in the founding of America and its Constitution.

In this 1968 article in Science, the ecologist Garrett Hardin mainstreamed concerns about the "Tragedy of the Commons." Hardin was particularly worried about human overpopulation.

F.A. Hayek presents a very thorough analysis on the role of knowledge and infomation in societies, how it is transmitted in various societies and economic systems, how a lack of knowledge ultimately proves to be the downfall of central planning, and other key topics.

In 1832, William Forster Lloyd observed that cattle grazing on common land tended to be scrawnier than those raised in private enclosures. This came to be known as the "tragedy of the commons." Lloyd's Two Lectures are inspired by Thomas Malthus and other British intellectuals who were worried about unsustainable population growth. 

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