Elinor Ostrom: Institutional Change

Institutions are the formal constraints (rules) and informal constraints (norms) that structure human interaction. That is the often-quoted definition from economic historian Douglass North.

From the 2008 paper, "Developing a Method for Analyzing Institutional Change," by political scientist Elinor Ostrom:

In our effort to understand institutional change, we must ... confront three concepts that are frequently used interchangeably in social science literature: strategies, norms, and rules. Strategies are plans of actions that individuals adopt primarily for prudential reasons to achieve preferred outcomes in light of expectations of the likely strategies of others. … Norms represent preferences related to prescriptions about actions or outcomes that are not focused primarily on short-term materials payoffs to self. … Rules are linguistic statements similar to norms, but rules carry an additional, assigned sanction if forbidden actions are taken and observed by a monitor. …

[H]uman agents frequently try to use reason and persuasion in their efforts to devise better rules (for themselves and their supporters or for a broader community). The process of choice, however, always involves experimentation. … Whenever individuals agree to add a rule, change a rule, or adopt someone else's proposed rule set, they are conducting a policy experiment. …

For rule configurations to evolve, there must be processes that: (1) generate variety, (2) select rules based on relatively accurate information about comparative performance in a particular environment, and (3) retain rules that perform better in regard to criteria such as efficiency, equity, accountability, and sustainability. …

Institutional monocropping generates systems that have little variety in their formal rules in environments with substantial variety in the ecological regions in which they are situated. While expert knowledge can be a great asset in the design and implementation of local resource systems, simply imposing a uniform set of formal rules and ignoring local ecological and social knowledge does not produce the variety needed to learn from experience.

Examining institutions in the context of irrigation systems ("I do not think we can develop a general theory of institutional change until we understand the processes of change in multiple specific settings"), Ostrom describes conditions that enhance learning and productive rule evolution. Paraphrased:

• participants have a voice in making change;
• participants are willing to invest in learning about options;
• the interests of participants with the largest stakes are in broad accord with overall productivity;
• the political system encourages local autonomy and provides oversight;
• rules vary across juridictions;
• the social and economic environment allows for learning from the successes and failures of others;
• participants have developed learning practices; and
• biophysical disturbances occur frequently enough to stimulate learning.

(See also: Allan Schmid on Social Learning, Evolution, and Emergence. Hat tip: Greg H.)