For a while now I've had an uneasy feeling that the Tragedy of the Commons framework was missing something.
Here's the Wikipedia explanation of the Tragedy:
The cause of any tragedy of the commons is that when individuals use a public good, they do not bear the entire cost of their actions. If each seeks to maximize individual utility, he ignores the costs borne by others. This is an example of an externality. The best (non-cooperative) short-term strategy for an individual is to try to exploit more than his share of public resources. Assuming a majority of individuals follow this strategy, the theory goes, the public resource gets overexploited.
So what do I think is missing? Take a simple example. Bob lives on an island with nine other people. On the island, each person has their own piece of land and access to a common area that has a grove of banana trees (is that the right term?). Anyone can go into the banana grove anytime and pick bananas. What do we expect to happen?
According to the Tragedy of the Commons framework, Bob will go into the grove whenever he is hungry, pick all of the bananas necessary to make him happy and then leave. Bob won't consider that each banana he picks makes it more difficult for someone else to pick a banana or that picking bananas too quickly might mean that others might have to go without bananas. What's even worse, Bob will assume that everyone else thinks like he does and "if everyone else is doing it, why not me?"
Is that in fact what happens? Are the Bob's of the world so greedy that they will ALWAYS exploit common property resources? Consider the 1996 FAO report Halting Degradation of Natural Resources: Is there a role for Rural Communities?. The full report is summarized as:
To the initial pessimism of the tragedy of the commons' doctrine, a more optimistic phase has succeeded characterized by the belief that village societies are able to use their resources efficiently provided that the State does not interfere.
That's right. Some economists now believe that under certain conditions, the commons may be self-regulating. And that government regulation makes things worse. If that's the case, there must be something missing from the economic model. What's missing? In my view it's social interaction (or social norms).
Back to the island. Suppose Bob knows that evryone else is depending on him to act 'right' and only take the minimum number of bananas he needs. If he takes more, everyone else will be mad and take their marbles and go home. That is, Bob will feel bad if he violates what is socially expected. Isn't that a utility loss to Bob? Doesn't that make Bob worse off? If Bob decides to constrain his own behavior in response to the threat of moral sanction, isn't that fully consistent with a rational economic decision? Why am I writing in questions?
As Dad used to ask:
If everyone else walked around with dog s**t on their nose, would you[a]?
Well...at the risk of disappointing Dad, if everyone else is doing it, yep, I probably would too but of course I never said that to him directly. Otherwise I'd be violating the social norms and that would make me feel bad.
For my view on what this means about regulating the commons, stay tuned...
[a] Dad had a way of getting directly to the point. Maybe that's why so many of my posts have dealt with dog poop.
