Tragedy of the Commons

Tragedy of the Commons: Overuse, Common-Pool Resources and Their Governance in Health Care

The tragedy of the commons describes how a limited resource open to many users is run down although every user would prefer it preserved, because each keeps the whole gain from drawing a little more while the damage is divided among all. In health economics the standard example is antibiotic effectiveness; the same structure appears in fixed budgets shared by competing providers and in pandemic vaccine supply. This page covers Hardin's argument, what makes a resource a commons, Elinor Ostrom's design principles, an illustrative prescribing model, health applications, boundaries and misreadings.

Hardin's pasture: individually sensible use, collective ruin

Garrett Hardin published "The Tragedy of the Commons" in Science in December 1968, taking the scenario from an 1833 pamphlet by William Forster Lloyd: a pasture open to all, on which each herdsman asks what he gains from adding one more animal. The positive component of this utility is nearly +1, since the herdsman receives all the proceeds from the extra animal; the negative component, the extra overgrazing, is only a fraction of −1, since its effects are shared by all the herdsmen. Every herdsman reaches the same conclusion and keeps adding animals in a limited world. In Hardin's words, "Freedom in a commons brings ruin to all."

His own concern was population growth, which he argued had no technical solution, meaning one that changes only the techniques of the natural sciences, not human values. His options ranged from private property and allocated rights of entry to coercive laws or taxing devices; the only coercion he recommended was "mutual coercion, mutually agreed upon by the majority of the people affected", and he rejected appeals to conscience as self-eliminating. In 1998 Hardin wrote that the weightiest mistake in the essay was omitting the adjective "unmanaged": he and Lloyd had analysed the subset of commons where "help yourself" attitudes prevail.

Rivalry, exclusion and the property regime

In her 2009 Nobel lecture, Ostrom recalled Paul Samuelson's split of goods into private goods, excludable and rivalrous, and public goods, neither. She and Vincent Ostrom replaced rivalry with subtractability of use, let both properties run from low to high, renamed Buchanan's club goods toll goods, and added common-pool resources, which share subtractability with private goods and difficulty of exclusion with public goods. The health column gives this page's illustrations.

A tragedy needs both properties. If exclusion were easy, an owner could limit use; if use did not subtract, extra users would cost the others nothing.

Ostrom also separated the resource from its rules. The term "common property resource", she argued, confused the nature of a good with the presence or absence of a property regime: a common-pool resource can be government, private or community property, or owned by no one. Hardin's pasture "open to all" is the last case, open access. Users of a managed commons may hold bundles of rights, such as access, withdrawal and exclusion; property rights covers Demsetz on communal ownership.

Ostrom and the self-governing commons

Ostrom observed that Hardin's portrayal was widely accepted because it matched the prisoner's dilemma prediction of no cooperation, and many presumed that all common-pool resources were owned by no one, so officials had to impose rules. Case studies showed many users organising themselves. In laboratory experiments isolated, anonymous individuals overharvested, but allowing communication, or "cheap talk", reduced overharvesting and raised joint payoffs, contrary to game-theoretical predictions; where users could neither communicate nor know one another, the prediction of no cooperation received substantial support. In all the self-organised systems her group studied, users had boundary rules, rules allocating the resource, active monitoring and local sanctions.

Comparing long-lived regimes with failures, she drew design principles, first set out in her 1990 book Governing the Commons. The lecture gives an update by Cox, Arnold and Villamayor-Tomás, who reviewed over 100 studies; two thirds confirmed that robust systems show most principles and failures do not.

Wilson and colleagues argued that universal health systems split a population's capitated budget, the common financial resource, among providers until "the commons are no longer common, but 'bits'", with no responsibility for the whole. They applied ten principles adapted from Ostrom by McGinnis and put a culture of stewardship first.

Worked example: prescribers sharing one antibiotic

All numbers are illustrative. $N$ prescribers in a region use the same antibiotic over a season. A course is worth £100 to the patient at full effectiveness and costs £20, including adverse effects; resistance lowers the value of every course by £0.01 for each course prescribed in the region. Prescriber $i$ chooses courses for their own patients to maximise:

$$ \pi_i = q_i ,(a - c - kQ), \qquad Q = \sum_{j=1}^{N} q_j $$

where $\pi_i$ is the net value of prescriber $i$'s courses, $q_i$ is that prescriber's courses, $Q$ is total courses, $a = 100$ is the value per course at full effectiveness, $c = 20$ is the cost per course and $k = 0.01$ is the loss of value per course for each course prescribed.

1. The individual choice. Setting the derivative of $\pi_i$ with respect to $q_i$ to zero gives $a - c - kQ - kq_i = 0$. With identical prescribers this yields:

$$ q^{E} = \frac{a-c}{k(N+1)}, \qquad Q^{E} = \frac{N(a-c)}{k(N+1)} $$

where $q^{E}$ is each prescriber's courses in equilibrium and $Q^{E}$ is the regional total. With $N = 4$, $q^{E} = 80 / (0.01 \times 5) = 1600$ and $Q^{E} = 6400$. Each course is then worth 80 − 0.01 × 6,400 = £16 net, and total net value is 6,400 × 16 = £102,400.

2. The social optimum. A single steward maximising total value $Q(a - c - kQ)$ sets $Q^{} = (a-c)/2k = 80/0.02 = 4000$ courses, where $Q^{}$ is the optimal total. Each course is worth 80 − 40 = £40, and total value is 4,000 × 40 = £160,000. Equilibrium use is 60% higher and loses £57,600, or 36% of the attainable value.

3. Where the cost goes. At the equilibrium one more course is worth £16 net, lowers the value of the prescriber's own 1,600 courses by 0.01 × 1,600 = £16, and lowers the value of the other prescribers' 4,800 courses by 0.01 × 4,800 = £48. The prescriber nets zero and stops; the region loses £48.

4. More users, worse outcome. Use rises with the number of prescribers:

As $N$ grows, total use approaches 8,000 courses and the net value of the resource approaches zero, the open-access outcome.

5. Two governance fixes. A quota of 1,000 courses per prescriber, monitored and enforced, reaches the optimum. Alternatively, a charge $t$ equal to the external cost at the optimum, 0.01 × 3,000 = £30 per course, changes each prescriber's choice to $(a - c - t)/(k(N+1)) = 50/0.05 = 1000$ courses, so total use is 4,000. The £120,000 raised is a transfer and does not reduce total value.

Interpretation. The same drug, patients and prescribers yield £160,000 or £102,400 depending only on the rules of use. The model omits transmission benefits of treatment, future seasons and differences in need, any of which can change the answer.

Commons problems in health care

The structure recurs wherever decision makers share one depletable pool. Three cases follow.

Antibiotic effectiveness

A 2006 policy forum in PLoS Medicine argued that appropriate antimicrobial use benefits individual patients but costs society by selecting for resistant strains, mirroring Hardin's tragedy. It treated the campaign to use antimicrobials only where they work as a technical solution in Hardin's sense, reaching only the individual optimum. Coercion could mean an antimicrobial-use levy or regulation; privatisation was impossible, as effectiveness cannot be divided, but tracking prescriptions would hold individuals accountable for extremes of use.

Giubilini called antibiotic effectiveness a common pool resource, noting that, unlike Hardin's herdsmen, patients can bear part of the cost by carrying resistant bacteria. He argued for taxing antibiotic use for minor, self-limiting infections, with revenue funding conservation and innovation. Porco and colleagues found that a conflict between individual and society may arise, though not in all cases. The clinical side is under antimicrobial resistance, the prescribing game under game theory.

Shared budgets under volume competition

Chen and Fan call the funds in Taiwan's global budget, a fixed sum divided by the points all hospitals bill, in essence a common-pool resource: expanding volume is each hospital's dominant strategy, yet joint expansion lowers the value of a point for all. Hurley, Lomas and Goldsmith applied a common-property framework to physician expenditure caps in two Canadian provinces, whose outcomes in utilisation growth were the opposite of what their incentive structures predicted, and stressed physician acceptance of the policy.

Vaccine supply in a pandemic

McAdams and colleagues saw COVAX as an attempt to address a tragedy of the commons that could arise if wealthier countries failed to fund it or struck bilateral deals securing doses without expanding global supply. Drawing on Ostrom, they proposed principles for bilateral deals and transparency about which countries followed them, so that others could socially sanction those that did not.

Using the commons lens in evaluation and policy

An economic evaluation counts the depletion of a shared resource only if its model includes it. The externality page covers the case for counting resistance as a cost of antimicrobial use; the commons framing adds that the cost depends on how many users share the resource and on its rules. For policy design it points to Ostrom's questions: who counts as a user, what each may take, who monitors and how breaches are sanctioned. A per-unit charge corresponds to a Pigouvian tax, and a fixed budget divided by volume can turn a cost-control tool into a commons.

Boundaries with related concepts

A commons problem is a reciprocal negative externality among the users of one resource: each imposes costs on the others and bears theirs. A public good raises the opposite problem, underprovision through free riding, because use does not subtract. The Nash equilibrium supplies the formal model, welfare economics the benchmark for judging overuse, and market failure the wider category.

Common misreadings

Four errors recur. Each overstates what Hardin's model shows.

• Every commons ends in tragedy. Ostrom's cases include many self-governing users, and Hardin later limited his claim to unmanaged commons.
• Common property means open access. A common-pool resource may be owned by a community with clear rules; open access is only the case where no one owns it.
• The only remedies are privatisation or the state. Ostrom's work describes user governance as a third route, and antibiotic effectiveness cannot be privatised at all.
• All antibiotic use depletes a commons. Porco and colleagues found that more use benefits society in some circumstances, and treatment can protect others by stopping a pathogen being passed on.

Sources

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• Hardin G. The tragedy of the commons. Science. 1968;162(3859):1243-1248. https://doi.org/10.1126/science.162.3859.1243
• Hardin G. Extensions of "The tragedy of the commons". Science. 1998;280(5364):682-683. https://doi.org/10.1126/science.280.5364.682
• Hurley J, Lomas J, Goldsmith LJ. Physician responses to global physician expenditure budgets in Canada: a common property perspective. Milbank Quarterly. 1997;75(3):343-364. https://doi.org/10.1111/1468-0009.00059
• McAdams D, McDade KK, Ogbuoji O, Johnson M, Dixit S, Yamey G. Incentivising wealthy nations to participate in the COVID-19 Vaccine Global Access Facility (COVAX): a game theory perspective. BMJ Global Health. 2020;5(11):e003627. https://doi.org/10.1136/bmjgh-2020-003627
• Ostrom E. Beyond markets and states: polycentric governance of complex economic systems. Nobel Prize lecture, 8 December 2009. https://www.nobelprize.org/uploads/2018/06/ostrom_lecture.pdf
• Porco TC, Gao D, Scott JC, Shim E, Enanoria WT, Galvani AP, Lietman TM. When does overuse of antibiotics become a tragedy of the commons? PLoS ONE. 2012;7(12):e46505. https://doi.org/10.1371/journal.pone.0046505
• Wilson T, Bevan G, Gray M, Day C, McManners J. Developing a culture of stewardship: how to prevent the tragedy of the commons in universal health systems. Journal of the Royal Society of Medicine. 2020;113(7):255-261. https://doi.org/10.1177/0141076820913421