Tuesday, August 17, 2010

How economists would take on skateboarders?

Although Treasury Secretary Tim Geithner is no stranger to skateboards, economists probably couldn't win a skate off with local skateboarders in Silver Spring, but we can analyze the problem of skateboarders in a public space. A new civic building with a nice large plaza in front opened this summer just a few blocks from my house in downtown Silver Spring. Soon after it opened skateboarders came. Accounts vary but most skaters seemed well behaved and a few caused trouble including an assault. A few bad apples ruined the fun and now there is no skating in the plaza.

So should skating continue or be outlawed? I really like the opening lines of this local blog post on the issue form blogger Just up the Pike

"We might want to impose rules on a park or plaza to make it seem safer or more pristine, but excessive regulations could kill the vibrancy that people go there for. Sometimes, we have to let people police themselves."

The plaza is a public resource. If a skateboarder skates on it then some may not get full enjoyment of the plaza. Although skaters also produce positive externalities for the people who enjoy watching them. Economists generally look at the negative effects of one user taking part of a public resource on another person. If several farmers share a pasture, if I let my cows graze not as many of your cows can graze. Similar examples come up in water use, fishing, and forest management. In fact Elinor Ostrom won a Nobel Prize in economics for the her contribution to the study of public resources. From the Nobel Prize press release:

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.

It's been a while since I've read Ostrom's work, but generally common property is better managed when there are few users, they interact often, and share cultural norms. Ostrom's work might suggest that a place like a plaza in an urban area might not be the best place to let rules develop organically. However, I think it was worth seeing how things might have worked out.

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