4:55pm

Tue June 12, 2012
Planet Money

Remembering Elinor Ostrom, Nobel Laureate

Originally published on Wed June 13, 2012 10:08 am

Elinor Ostrom, the only woman ever to win an economics Nobel, died today at age 78.

She was famous for challenging an idea known as the tragedy of the commons — the theory that, in the absence of government intervention, people will inevitably overuse a shared resource.

So, for example, if a village shares a pasture, it's in the individual interest of each farmer to graze his cattle as much as possible on the pasture even though, in the long run, overgrazing may ruin the pasture for everyone.

"It's a problem, it's just not necessarily a tragedy," Ostrom told us when we spoke to her in 2009. "The problem is that people can overuse [a shared resource], it can be destroyed, and it is a big challenge to figure out how to avoid that."

But, she said, economists were "wrong to indicate that people were helplessly trapped and the only way out was some external government coming in or dividing it up into chunks and everyone owning their own."

In fact, Ostrom found, there were lots of real-world examples where the theory didn't hold up — places where local people got together and figured out how to manage shared resources without destroying them.

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Transcript

AUDIE CORNISH, HOST:

The first and only woman to win the Nobel Prize in Economics died today in Indiana. Elinor Ostrom was 78. Her work on how natural resources are shared challenged the status quo.

Zoe Chace of NPR's Planet Money has this remembrance.

ZOE CHACE, BYLINE: One of the knottiest issues in economics is the tragedy of the commons. But it turns out, it's not so tragic.

DR. ELINOR OSTROM: I want to make a distinction between the tragedy and the problem.

CHACE: A problem that can be solved, as Elinor Ostrom told NPR a few years ago. In 1968, young Elinor read an article by Garrett Hardin which posed a classic economic problem: A cow pasture open to everyone.

OSTROM: Everyone would then put their cows on and they would overharvest.

CHACE: That's the classic tragedy of the commons - everyone uses something, but no one is in charge. So nobody takes it upon themselves to take care of a common good.

OSTROM: So he was right to identify this as a potential problem. Where he was wrong was that the tragedy is - the way he expressed it - they can't ever solve it. They were trapped. Solutions had to come from outside.

CHACE: Either the government had to step in and police the pasture or the pasture had to be divided up between the people who used it and privatized. That was the only way to solve the tragic problem, as Hardin saw it. But Ostrom found tons of examples where this didn't play out. In fact, in the Swiss Alps, there was this exact situation: A pasture with cows on it in the mountains.

OSTROM: In the Alps, it's patchy. And so it snows well in one location, and another one, not much.

CHACE: So every year, certain areas will more lush than others - better for feeding. And it's going to vary from year to year. If you fenced it off into small sections, then most of the farmers would be out of luck every year. But just put a fence around the whole thing and everyone benefits.

OSTROM: They've had plenty of chance to make decisions over the centuries, and they've chosen common property.

CHACE: Because it works out better for everyone - local solution to a local problem, not from a centralized government in Geneva.

Ostrom was a political scientist, not an economist. But she complicated the classic economic idea that everything is driven by self-interest.

MIKE MGGINNIS: Self-interest is part of it, you can't ignore that. But you can get communities together to come up with rules that make sense.

CHACE: Mike McGinnis worked with Elinor Ostrom at Indiana University. She taught there for more than 40 years with her husband Vincent; long enough to solve one of the biggest tragedies of the commons - the office kitchen.

OSTROM: We're all supposed to clean our own dishes. But every night, someone does a kind of final check and we have a spatula that goes in our mailboxes on the day that we're supposed to do that.

CHACE: Then Elinor Ostrom went on to win the Nobel Prize in economics in 2009, the only woman ever to do so.

Zoe Chace, NPR News. Transcript provided by NPR, Copyright NPR.

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