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Last modified: Tuesday, December 8, 2009

Notes on complexity, communication and trust: IU's Ostrom delivers Nobel lecture to worldwide audience

"Complexity is not the same as chaos," Ostrom tells worldwide audience.

FOR IMMEDIATE RELEASE
Dec. 8, 2009

STOCKHOLM -- The complexity of human social and economic behavior is something to be analyzed, understood and appreciated, not feared or denied, Indiana University Professor Elinor Ostrom told a worldwide audience today (Dec. 8) in her Nobel Prize Lecture.

Ostrom Nobel Lecture

Photo by Steve Hinnefeld

Indiana University Professor Elinor Ostrom spoke to a worldwide audience today (Dec. 8) during her Nobel Prize Lecture titled "Beyond Markets and States: Polycentric Governance of Complex Economic Systems."

In a lecture titled "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," Ostrom recounted how, through painstaking research, she and her colleagues have demonstrated that there are effective ways to study complexity. "Complexity is not the same as chaos," she said.

Ostrom and Oliver Williamson, the other recipient of the 2009 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, delivered their Prize Lectures to a live audience at Stockholm University's Aula Magna.

The first woman to receive the Nobel economics prize, Ostrom is the Arthur F. Bentley Professor of Political Science and senior research director of the Workshop in Political Theory and Policy Analysis at IU Bloomington. She also is founding director of the Center for the Study of Institutional Diversity at Arizona State University.

In a 30-minute lecture illustrated with PowerPoint slides, Ostrom summarized her half-century-long intellectual journey to understand the mechanisms of cooperation in human societies, including her collaborations with her husband and Workshop co-founder, Vincent Ostrom.

When she began her research in the 1960s, Ostrom said, it was "a very simple world" according to economic theory. There were two types of goods: public and private. And there were two systems for governing their use and exchange: markets and the state.

Over the years, she and her colleagues added common-pool resources and "toll" goods to the types of goods that could be analyzed. They developed the Institutional Analysis and Development framework, allowing them to refine their ideas through field work, laboratory experiments using game theory, and meta-analyses of studies of resource management.

In the influential 1968 essay "The Tragedy of the Commons," Garrett Hardin famously argued that humans dependent on a common-pool resource were helplessly trapped, destined to overuse and destroy the resource that sustained them.

But Ostrom had seen the opposite in her graduate research, when she studied how Southern California residents used informal associations to solve problems related to groundwater use. Later, with IU colleagues and students, she studied large and small police departments. They found the best results came not from large size but from "polycentric" systems: small departments for direct services, consolidated efforts for indirect services such as crime labs.

She also has studied grazing systems, fisheries and irrigation systems, including a comparison in Nepal of "primitive" farmer-built irrigation dams with multi-million-dollar government-built dams.

"We found the farmer systems got more crops, were less expensive to run, and they got more water to the tail end," Ostrom said. "Amazing!"

Current research includes studies of forest management in Africa, Asia, Latin America and the United States. "We have some surprising findings," Ostrom said. For example, it seems that who monitors a forest against over-use is more important to successful governance than who owns the forest.

Through the research, Ostrom identified "design principles" that are present when common-pool resources are managed well and an understanding of attributes that affect whether people will communicate and work together to manage public goods or common-pool resources. A key attribute, she said, is learning to trust one another.

"There's a five-letter word I would like to repeat and repeat and repeat: Trust," she said.

She said it is unfortunate that some public officials and policy makers ignore the research findings and attempt to impose one-size-fits-all approaches to managing resources. "We must learn how to deal with complexity rather than rejecting it," she said. "And we should not be proposing panaceas."

A final text of Ostrom's lecture will be posted on the Nobel Foundation Web site, http://www.nobelprize.org, in early 2010. Her presentation in Stockholm may be viewed on the Web at http://broadcast.iu.edu.