Elinor Ostrom

In this video, Professor Tyler Cowen examines the late Elinor Ostrom's most important contributions to economics. A political scientist by trade, Ostrom became the first woman ever to win the Nobel Memorial Prize in economics for her work on the tragedy of the commons, which can occur when every member of a community is free to use a given resource as much as they desire. Let's use water as an example of a resource. No one owns the water in an aquifer, so anyone is free to extract as much as they want. This creates an incentive for each individual to quickly extract as much water as possible, leading to a rapid decrease in the supply.

By doing on-the-ground fieldwork, Ostrom saw that this model does not always play out in real communities. She discovered that local group norms can effectively regulate the consumption of common resources.