In 1968, Garrett Hardin wrote an article where he coined the term: the tragedy of the commons. Hardin was an American ecologist who was obsessed and concerned with the prospect of human overpopulation.
In his article, the term tragedy of the commons was used to describe a situation where individuals – all acting independently and in their own self-interest – actually end up behaving in a way that is detrimental to the larger group and that negatively impacts some sort of common resource.
Just in case, here’s another definition via Investopedia:
An economic problem in which every individual tries to reap the greatest benefit from a given resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals.
In 1968, Garrett Hardin wrote an article where he coined the term: the tragedy of the commons. Hardin was an American ecologist who was obsessed and concerned with the prospect of human overpopulation.
In his article, the term tragedy of the commons was used to describe a situation where individuals – all acting independently and in their own self-interest – actually end up behaving in a way that is detrimental to the larger group and that negatively impacts some sort of common resource.
Just in case, here’s another definition via Investopedia:
An economic problem in which every individual tries to reap the greatest benefit from a given resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals.
So what would be an example of a tragedy of the commons?
You may not have thought of it in these terms, but I bet you that everybody reading this blog has experienced one.
I will give you two examples.
1. The first is that of electricity consumption.
In most condominiums, there are two types of ways that electricity gets billed and paid. Either the whole building gets one bill (master metering) or each individual resident gets a bill (submetering).
In the case of master mastering, each resident’s consumption isn’t tracked and so nobody knows who is consuming what. But in the case of submetering, each individual resident only pays for the electricity that they use.
Not surprisingly, the data shows that submetering can cut electricity consumption by 10 to 30%. That’s because it creates a 1:1 relationship between usage and cost. There’s now a strong incentive to conserve.
With master metering, there isn’t a 1:1 relationship between usage and cost. The additional burden/cost of consumption actually gets shared by everyone else in the building. And since each individual is looking to maximize their own benefit, they lose the incentive to conserve. As a whole, this makes the entire group worse off.
2. The second example is that of congestion on public, un-tolled roads.
In most cities, public roads are a resource that is “easily available to all individuals” (to use Investopedia’s terminology). They are basically free. The marginal cost of driving another kilometer to work on a road is basically nothing (other than a bit of gas and some time).
What this does is create a situation where individuals – in their pursuit of maximum individual benefit – start to overload the road. Everybody just wants to get where they need to go and there’s no incentive to conserve the resource (i.e. the road). Once again, the result is that the entire group becomes worse off.
That’s why building more road rarely/never works. You’re simply increasing a resource that is easily available to all individuals. What we should instead be doing is looking at submetering our roads (i.e. pricing our roads). It’s been proven time and time again to reduce road congestion basically overnight.
I had never heard of the term tragedy of the commons before today, but I like it a lot. So the next time you’re stuck somewhere in traffic, you can now scream to yourself: What a tragedy of the commons!
As disappointing as this week’s vote on Toronto’s Gardiner Expressway East was, there is one good thing that has come to the forefront and that is the will to explore road pricing. At this point, I have almost no confidence that this City Council would ever vote it in, but at least we’re talking about it. That’s better than not talking about it.
If you’ve been reading Architect This City since the beginning, you might know that I’ve been a vocal supporter of road pricing. I wrote two posts on the topic: The case for electronic road pricing (which was based on an HBS case I did as part of my MBA) and More on electronic road pricing (which was a Lunch & Learn I did while I was at TAS).
I continue to believe that road pricing is a highly sensible solution to big city traffic congestion. But I do think that an electronic/variable pricing model is preferable to and more equitable than a flat toll model. A variable model means that the price of using the road adjusts based on congestion levels and/or the time of day. I also think that we should use as much of the revenues as possible to fund continuous transit improvements.
If you’re interested in learning more about this topic, check out the two posts mentioned above. I’d also love to hear your thoughts on road pricing in the comment section below. Would you welcome it in your city?
So what would be an example of a tragedy of the commons?
You may not have thought of it in these terms, but I bet you that everybody reading this blog has experienced one.
I will give you two examples.
1. The first is that of electricity consumption.
In most condominiums, there are two types of ways that electricity gets billed and paid. Either the whole building gets one bill (master metering) or each individual resident gets a bill (submetering).
In the case of master mastering, each resident’s consumption isn’t tracked and so nobody knows who is consuming what. But in the case of submetering, each individual resident only pays for the electricity that they use.
Not surprisingly, the data shows that submetering can cut electricity consumption by 10 to 30%. That’s because it creates a 1:1 relationship between usage and cost. There’s now a strong incentive to conserve.
With master metering, there isn’t a 1:1 relationship between usage and cost. The additional burden/cost of consumption actually gets shared by everyone else in the building. And since each individual is looking to maximize their own benefit, they lose the incentive to conserve. As a whole, this makes the entire group worse off.
2. The second example is that of congestion on public, un-tolled roads.
In most cities, public roads are a resource that is “easily available to all individuals” (to use Investopedia’s terminology). They are basically free. The marginal cost of driving another kilometer to work on a road is basically nothing (other than a bit of gas and some time).
What this does is create a situation where individuals – in their pursuit of maximum individual benefit – start to overload the road. Everybody just wants to get where they need to go and there’s no incentive to conserve the resource (i.e. the road). Once again, the result is that the entire group becomes worse off.
That’s why building more road rarely/never works. You’re simply increasing a resource that is easily available to all individuals. What we should instead be doing is looking at submetering our roads (i.e. pricing our roads). It’s been proven time and time again to reduce road congestion basically overnight.
I had never heard of the term tragedy of the commons before today, but I like it a lot. So the next time you’re stuck somewhere in traffic, you can now scream to yourself: What a tragedy of the commons!
As disappointing as this week’s vote on Toronto’s Gardiner Expressway East was, there is one good thing that has come to the forefront and that is the will to explore road pricing. At this point, I have almost no confidence that this City Council would ever vote it in, but at least we’re talking about it. That’s better than not talking about it.
If you’ve been reading Architect This City since the beginning, you might know that I’ve been a vocal supporter of road pricing. I wrote two posts on the topic: The case for electronic road pricing (which was based on an HBS case I did as part of my MBA) and More on electronic road pricing (which was a Lunch & Learn I did while I was at TAS).
I continue to believe that road pricing is a highly sensible solution to big city traffic congestion. But I do think that an electronic/variable pricing model is preferable to and more equitable than a flat toll model. A variable model means that the price of using the road adjusts based on congestion levels and/or the time of day. I also think that we should use as much of the revenues as possible to fund continuous transit improvements.
If you’re interested in learning more about this topic, check out the two posts mentioned above. I’d also love to hear your thoughts on road pricing in the comment section below. Would you welcome it in your city?
