Saturday, October 12, 2019

Order Without Law, Robert Ellickson

Robert Ellickson's Order Without Law is a study, as its sub-title says of "How Neighbors Settle Disputes". Ellickson starts with a deep dive into how ranchers and farmers in Shasta County, in the rural northern part of California actually deal with a problem that Richard Coase brought up in a classic paper on transactions costs. In "The Problem of Social Cost", Coase argued that if transaction costs were irrelevant, it wouldn't matter how property rights were allocated. Regardless of whether ranchers were responsible for keeping their cattle from straying or farmers were responsible for keeping unwelcome beasts out of their crops, the same solutions would be reached. If the law doesn't allocate responsibility to the low cost actor, then according to Coase the other party would find a way to pay the other party to do the cheaper thing. Of course, most of the argument since then has focused on the fact that transaction costs are seldom negligible.
Ellickson says that Shasta County is uniquely positioned for a study on this issue
Shasta County is "open range." In open range an owner of cattle is typically not legally liable for damages stemming from his cattle's accidental trespass upon unfenced land. Since 1945, however a special California statute has authorized the Shasta County Board of Supervisors, the county's elected governing body, to "close the range" in subareas of the county. A closed-range ordinance makes a cattleman strictly liable (that is liable even in the absence of negligence) for any damage his livestock might cause while trespassing within the territory described by the ordinance. The Shasta County Board of Supervisors has exercised its power to close the range on dozens of occasions since 1945, thus changing for selected territories the exact rule of liability that Coase used in his famous example.
This is the kind of change that economists love to study, because they can look at how behavior changes over time and treat the change of law as an independent variable. Any consistent changes in people's activity after the law changes can be treated as the result of the legal change.Ellickson focuses on how neighbors actually respond when trespasses occur. The book is filled with colorful stories giving details of what happened when particular responsible or irresponsible ranchers allowed their livestock to wander. The main observation is that while people were generally aware whether their property was in 'open' or 'closed' lands, their resolutions to incidents had little to do with what the law called for and more to do with a commonly accepted wisdom about that cattle owners are morally responsible for the damage. According to Ellickson, this fits Coase's model, since cattle owners are the low-cost provider. There are a variety of different types of pasture throughout Shasta County, and the cattle owners know more about how densely they are using any particular piece, and are more aware of which neighbors are most sensitive to their intrusions.
One of the most important enforcement mechanisms that Ellickson cites is plain simple gossip. Most of the people he talks about are eager to make things right, rather than be the subject of their neighbors' pointed comments. There is one member of the community who gets discussed a lot, but there are more extreme measures available when there are repeated run-ins, and one party is a consistent non-cooperator.
Ellickson is a good story teller and an astute observer. While the subjects of his study are less tight-knit than the farmers Ostrum described, there is enough social cohesion so that norms develop, and neighborliness is for the most part, a stronger limitation on people's interactions than actual laws.