Tragedy of the Commons

Today in my two and a half hour HUM 201 class I decided to think about something I enjoy for once – ECONOMICS. There are two sides to the economics coin. On one hand you have macro: the study of the big picture. How will an increase in the nation’s money supply affect aggregate demand? The other side of the coin deals with micro: the study of why people do what they do. How does an increase in the price of a good affect the quantity consumed? This part of economics is super interesting; it includes “would you rather” questions and game theory.

Part of the microeconomics framework studies how individuals use and react to public goods. A public good is something loaded with externalities. For instance, think of a road. If one person pays to fix it up everyone benefits at no cost to them. Thus, if left to individuals to take care of, it will become run down. That’s why we pay road taxes and the gov’t takes care of it. The same goes for an army. If I hire an army to protect me I have inadvertently protected my neighbors as well. If I can’t get my neighbors to pay me for the service I might as well sit this one out and wait for one of them to hire an army. Thus no one hires an army and we get taken over by Canada. Again, this is why we have a national army paid for by our tax dollars.

Public goods tend to get abused. There was an instance back in the day when folks discovered an island full of giant stone heads but devoid of people. For a long time no one knew where the people went who created them. Then, like revelation from heaven, light shone on the situation. The natives, not to dissimilar from us, had an island with limited resources to live off of. Wanting to get more than their neighbors they became gluttonous and “fished out the pond.” Turns out that they didn’t leave enough behind to sustain the island indefinitely and they all died. Well why should I take less? What ensures my neighbor will take less? It was too much of a public good. Historians and economists call this the “Tragedy of the Commons.”

Two years ago one of my roommates thought it would be a good idea for all of us to pitch in $20 a week and pool it to buy in bulk from Costco. This would give us a shared food supply that, if divided evenly, would be more than we could buy on our own. There were four of us in total - two of us economists. We (the economists) immediately sensed a bad idea but after some coercing we decided to “give it a try.” It was like tragedy of the commons all over again except amplified by the appetites of 21 year old boys. The food was never actually divided up which was most likely the biggest pitfall. Each of us wanted to make sure they ate $20 worth of food each week. In fact, if we could eat $30 worth of food we would feel accomplished as if we’d beaten the system. One of us is a big milk drinker. To make sure I was drinking equally as much as him I had to increase my normal milk consumption fourfold. Everyone followed suit. The food and milk ran out extremely fast. After a few weeks of testing the results looked like this:

-mean: food lasting a total of 4 days

-standard deviation: 1 day

In the vernacular the food would last anywhere between 3-5 days (68% chance). As you might have guessed, we switched off of the bulk-buying program and our individual, lessened food supply lasted longer. Even though we no longer are faced with the tragedy of the commons we have not escaped the public good dilemma of doing dishes and keeping the front room clean.