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June 20, 2012 | Donald M. Berwick

In Elinor Ostrom’s legacy, a lesson for Beacon Hill

Elinor Ostrom, pictured in 2009, won a Nobel Prize in economics.AP File/2009

Imagine a village with a green pasture, held in common, on which all the villagers can graze their sheep. The common land has a peak carrying capacity – fewer sheep than the optimal number means the village isn’t taking full advantage of the meadow, but more than that level will eat too much of the grass, leaving the land barren.

This was the problem that demographer Garrett Hardin posed in a classic 1968 paper in Science magazine called “The Tragedy of the Commons,” posing a depressing conundrum for the millions of college undergraduates who have found it on their reading lists ever since, the way I did.


What does each rational villager do, asks Hardin? The answer: Each adds more and more sheep, heedless of the common good. Why not? The benefit of the next sheep goes wholly to its owner, while the damage from too many sheep is shared. And so rational actions by individuals lead to inevitable catastrophe for everyone. As Harden sunnily put it: “Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited. Ruin is the destination toward which all men rush. . .”

So most economists agreed, until Elinor Ostrom came along. In 2009 Ostrom became the first woman to win the Nobel Prize in Economics, and she won it by showing that the commons not only can be saved, but often is. For three decades, she sought out, found, and studied dozens of communities that had some “commons” they could choose to ruin or not — fish in a lake, trees in a forest, a limited supply of irrigation water. Ostrom called these “common pool resources” and found that, against Hardin’s dire prediction, they could be managed sustainably.

She studied how such communities succeeded, and found a recurrent set of norms and behaviors, whether among fisherman, foresters, or farmers. The successful groups acknowledged the limits explicitly, set up mechanisms for shared decisions, established rules of behavior for each member, monitored the resource and behaviors openly, and enforced their rules, sometimes severely.


The Commonwealth’s struggle to contain health care costs — now focused on the Legislature’s attempts to reconcile the House and Senate versions of the health care cost-containment legislation — is about managing the “common pool resource” that fuels health care: our wages. Wages, and nothing else, are the real source of every penny that Massachusetts health care consumes, whether channeled through taxes, employer or employee contributions to heath insurance, or out-of-pocket spending. Our wages are like irrigation water; they can go to health care or to other uses, but not both. Like the choice to add more sheep to the meadow, taking more dollars from this pool for health care can always seem like the sensible move. But that has resulted in health care taking more than its ideal share, leaving other uses parched. Health care costs are ruining the commons.

The proposal now for limits, best represented by the House version that calls for a rate of growth for health care costs 0.5 percent slower than the growth of the economy, is a chance for us to act as Ostrom would counsel us to: as a community, with respect for the commons, with rules that share the burden, with transparency about how we are doing, and with consequences for defection. Most payment incentives still favor increase without limits, and so it is no surprise that many Massachusetts physicians and hospitals are opposing the discipline of the House bill. They are making a mistake in doing so. They are trapping themselves and the rest of us in Hardin’s gloomy scenario, instead of following Elinor Ostrom’s way out.


These leaders at some level do know that redesign of both health care and the ways we pay for health care in the Commonwealth can produce what we want: excellent care at far lower cost. The formula for success is seamless, integrated care, with strict attention to patient safety, evidence-based practice, teamwork, prevention, and giving patients and families much more control over and knowledge about their own care. But, that’s a different system of care from the one we have now. It’s far easier just to keep protecting individual interests, instead of taking responsibility for solving the community’s shared problem.

Ostrom died last week – a loss not just to economics, but also to health care, a field she was just starting to study and help. She was a graceful scholar who proved that, at our best, we need not rush toward ruin. She is gone, but her work remains, and Massachusetts can use it. Our state’s health care leaders should embrace the House’s bolder goal: reducing the costs of health care (through improvement), and thereby freeing up both public and private resources for other worthy uses. And then they should set about the tough but thoroughly manageable job of changing their care without harm to patients. They can do it if they can find the will. The entire Commonwealth would be in their debt for such courage.


Donald M. Berwick is the former president of the Institute for Healthcare Improvement and the former administrator of the federal Centers for Medicare and Medicaid Services.