What Is the Tragedy of the Commons? | Business: Explained

HBS Online

17 Aug 202202:25

Summary

TLDRThis script delves into the environmental impact of everyday items, highlighting the concept of the Tragedy of the Commons. First introduced by William Forster Lloyd in 1833 and popularized by Garrett Hardin in 1968, this theory explains how individuals often exploit shared resources for personal gain, leading to their depletion. However, with moral and financial incentives, people can act for the greater good. By adopting sustainable practices, individuals can make decisions that benefit both society and the planet. For those interested in driving systemic change, an online course on Sustainable Business Strategy is recommended.

Takeaways

🤔 The environmental impact of everyday items is worth considering, even if they seem to have a positive effect.
🌍 The 'Tragedy of the Commons' describes how individuals exhaust shared resources by acting in their own self-interest.
📜 This concept was first introduced by William Forster Lloyd in 1833 and popularized by Garrett Hardin in 1968.
😕 People often use resources with a 'use it or lose it' mentality, focusing on short-term gains.
👥 Individuals can be motivated to act for the greater good through moral or financial incentives.
💧 An example of moral incentive is a town regulating water usage during a drought to encourage residents to follow the rules.
💵 Financial incentives, like bringing reusable bags to avoid fees, can also drive sustainable behavior.
🔍 Without regulation or transparency, people lack incentives to limit their use of shared resources.
♻️ Sustainable thinking can help individuals consider the long-term impacts of their actions and make better choices.
📚 For more on how collective efforts and business strategies can drive systemic change, explore the online course Sustainable Business Strategy.

Q & A

What is the Tragedy of the Commons?
-The Tragedy of the Commons is an economic theory that suggests individuals with access to a shared resource, acting in their own self-interest, will ultimately deplete that resource. It was conceptualized in 1833 by William Forster Lloyd and popularized by ecologist Garrett Hardin in 1968.
What does the term 'common' refer to in the context of the Tragedy of the Commons?
-In the context of the Tragedy of the Commons, a 'common' refers to a shared resource that is accessible to multiple individuals, such as a public park or a fishing ground.
Why do individuals act in their own self-interest when accessing a shared resource?
-Individuals act in their own self-interest due to a 'use it or lose it' mentality, where they believe they should get their share of the resource before it is depleted by others.
How can moral incentives motivate individuals to act for the greater good?
-Moral incentives can prompt individuals to consider the broader impact of their decisions. For example, residents might abide by water restrictions during a drought to avoid standing out with the only well-watered lawn in the community.
What role can money play in motivating sustainable behavior?
-Money can be a powerful motivator for sustainable behavior. For instance, people might choose to use reusable bags in grocery stores to avoid paying for paper or plastic bags, thus reducing waste.
How does the Tragedy of the Commons relate to the lack of regulation or transparency?
-The Tragedy of the Commons shows that without regulation or transparency, individuals have little incentive to refrain from overusing shared resources, leading to their depletion.
What can individuals do to become more sustainably minded?
-Individuals can become more sustainably minded by being aware of the long-term impacts of their short-term actions and making decisions that benefit both people and the planet.
Why is collective effort important in addressing the Tragedy of the Commons?
-Collective effort is crucial because it helps in managing shared resources effectively and sustainably. It ensures that the resource is not overused and depleted, benefiting everyone in the long run.
How can businesses be a catalyst for system-level change in sustainability?
-Businesses can drive system-level change by adopting sustainable practices, influencing consumer behavior, and promoting transparency and regulation in resource management.
What is the Sustainable Business Strategy course mentioned in the script?
-The Sustainable Business Strategy course is an online course that explores why collective efforts matter and how businesses can lead systemic change towards sustainability.

Outlines

00:00

🌿 The Tragedy of the Commons

This paragraph introduces the concept of the Tragedy of the Commons, an economic theory that explains how individuals can deplete shared resources when acting in their own self-interest. It was first conceptualized in 1833 by William Forster Lloyd and later popularized by ecologist Garrett Hardin in 1968. The theory suggests that without regulation or transparency, people have little incentive to conserve resources, leading to their eventual exhaustion. The paragraph also highlights how moral incentives or financial motivations can encourage individuals to act for the greater good, such as conserving water during a drought or using reusable bags to reduce waste.

Mindmap

Keywords

💡Tragedy of the Commons

The Tragedy of the Commons is an economic theory that describes how individuals with access to a shared resource act in their own self-interest, ultimately depleting the resource. This concept is central to the video's theme, as it explains the potential negative impact of unregulated use of common resources on the environment. The term was conceptualized in 1833 by William Forster Lloyd and popularized by Garrett Hardin in 1968.

💡Shared resource

A shared resource, or common, is a resource that is accessible to all members of a community. In the context of the video, it refers to environmental resources such as water, air, and land that are susceptible to overuse and depletion when individuals act in their own self-interest. The video discusses how the unregulated use of shared resources leads to environmental degradation.

💡Self-interest

Self-interest is the act of prioritizing one's own needs and benefits over those of others. The video highlights how individuals acting in their own self-interest can lead to the overexploitation of shared resources, contributing to the Tragedy of the Commons. This behavior contrasts with actions taken for the greater good of the community.

💡Depletion

Depletion refers to the reduction or exhaustion of a resource. In the video's context, it describes the gradual exhaustion of environmental resources due to overuse by individuals acting in their own self-interest. The concept emphasizes the need for sustainable practices to prevent the depletion of shared resources.

💡Moral incentive

A moral incentive is a motivation to act based on ethical considerations and the welfare of others. The video uses the example of a town regulating water usage during a drought to illustrate how moral incentives can lead individuals to act in the community's best interest, thus preventing the overuse of shared resources.

💡Regulation

Regulation refers to the implementation of rules or guidelines to control behavior. In the context of the video, regulation is necessary to manage the use of shared resources and prevent their depletion. Examples include laws limiting water usage during droughts or policies encouraging the use of reusable bags to reduce waste.

💡Sustainable practices

Sustainable practices are actions that meet current needs without compromising the ability of future generations to meet their own needs. The video advocates for sustainability as a way to mitigate the Tragedy of the Commons by encouraging individuals to consider the long-term impacts of their actions on the environment and community.

💡Economic theory

An economic theory is a set of principles and concepts that explain how economies function. The Tragedy of the Commons is an economic theory discussed in the video, highlighting how individuals' self-interested actions can lead to the depletion of shared resources. Understanding this theory is crucial for addressing environmental challenges.

💡Environmental impact

Environmental impact refers to the effect of human activities on the natural environment. The video stresses the importance of recognizing the environmental impact of everyday items and actions, urging individuals to adopt more sustainable practices to protect the ecosystem and prevent resource depletion.

💡Collective efforts

Collective efforts involve coordinated actions taken by a group of individuals to achieve a common goal. The video emphasizes the power of collective efforts in addressing environmental issues and overcoming the Tragedy of the Commons. It suggests that businesses and individuals can drive system-level change through sustainable practices and cooperation.

Highlights

Have you ever wondered how your favorite everyday items impact the environment?

Perhaps they have a positive effect, which is why you buy them.

Now imagine that's not the case. What if your favorite items threaten the ecosystem?

Or worse, what if consuming and using them threatens their very existence?

This scenario describes what's known as the Tragedy of the Commons, an economic theory conceptualized in 1833 by writer William Forster Lloyd.

The term was later used as the title of an influential essay by ecologist Garrett Hardin in a 1968 issue of the journal, Science.

The Tragedy of the Commons posits that individuals with access to a shared resource, also called a common, act in their own self-interest.

In doing so, they ultimately exhaust that resource.

When facing the inevitable depletion of a common or good, they typically act with their short term, best interests in mind.

They may have a use it or lose it mentality and think 'I better get my share while I still can.'

Despite this, individuals can be motivated to act for the greater good.

For example, consider a town in the midst of a drought that regulates the days and times residents are permitted to water their lawns.

To avoid standing out and having the sole pristine lawn in the community, every resident abides by the regulations and doesn't use more water than allowed.

This example illustrates how a moral incentive can prompt individuals to consider the broader impact of their decisions and act in the interest of others.

Money can be a powerful motivator too.

For instance, bringing reusable bags to the grocery store instead of paying for paper or plastic ones.

The Tragedy of the Commons shows that without regulation or transparency when it comes to choices and actions associated with goods, individuals have little incentive to refrain from taking too much.

But it doesn't have to be that way.

By becoming sustainably minded, individuals can be more aware of the long term impacts of their short term actions and make decisions that benefit both people and the planet.

If you want to learn more about why collective efforts matter and how business can be a catalyst for system level change, explore our online course Sustainable Business Strategy and discover how you can make a difference.