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Elinor Ostrom and the Nobel Prize

Written by: Bill Sherman on Monday, 12 October 2009, 11:44 AM

Today, Elinor Ostrom was named one of the recipients of the Nobel Prize in Economics. In my office, I have a 1/4 shelf of her books and journal articles. I first discovered her work in 2008, and I was absolutely amazed. Her work blends theory and real-world analysis. She’s not just a theoretician, she’s actively out in the world studying ways to improve lives.

Dr. Ostrom has advanced our uderstanding of common-pool resources–such as fisheries, underground water reservoirs, and small-farm aqueducts. In her 1990 book, Governing the Commons, she distinguishes between the common pool resource (a fishery or a reservoir) and the common pool unit (individual fish or units of water).

Dr. Ostrom has traveled the world studying how people manage common-pool resources. She studied water-rights in Los Angeles and Nepal. She¬†argued that many top-down systems to govern common resources fail–because outsiders neither understand nor can oversee the fair allocation of resources. In her experience, she’s see individuals and communities establish their own rules for “what is fair” and then police the system. Over her career, she has identified patterns on why common-pool projects around scarce resources will succeed or fail. That’s powerful for fisheries and global warming, but it also presents interesting insights for social networks and social capital.

Social networks can be viewed as a common pool resource (like a fishery), and social capital can be viewed as a common pool resource unit (like a fish).

Social Networks and Fisheries

So, it’s not only a good plan to fish within the best social networks but also to make sure those “fisheries” are well-managed. It provides a theoretical platform for a “give-first” mindset. You must also surround yourself with like-minded individuals who follow a similar set of rules. If individuals start cheating (taking more than their fair share), the system breaks down. Individuals can follow their self-interest and over-fish a fishery, or steal someone else’s water from an aqueduct in the middle of the night. So too can individuals deplete (or poison) a social network.

Next, I’ll take a look at how Elinor Ostrom’s principles of Governing the Commons can apply to the healthy management of a social network.

One Response to “Elinor Ostrom and the Nobel Prize”

  1. Graham Southwell Says:

    I thought that you might enjoy the following –
    http://bniblog.co.nz/social-capital/the-hidden-influence-of-social-networks/

    May 11th, 2010 11:18 pm

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