download EWE Lesson 3 (.doc file)
- Property rights
Standard 4: People respond predictably to positive and negative incentives.
Standard 10: Institutions evolve in market economies to help individuals and groups accomplish their goals. . . . [One] kind of institution, clearly defined and well-enforced property rights, is essential to a market economy.
Although they surely know it, students are unlikely to have articulated their recognition that ownership doesn’t always mean the same thing. Lesson Three seeks to clarify their understanding by taking a close look at one of the oldest and most fundamental of American values—private property rights. In examining the privileges and limitations of owning a house, as contrasted, for example, to owning a beautiful stream or a potentially dangerous weapon, students investigate how rules, customs, and laws define ownership.
The lesson then moves from the characteristics of private property rights to property held by the group rather than privately. The incentives created by common property lead to what has become known as the tragedy of the commons, the phenomenon in which even highly-valued environmental amenities and resources deteriorate through overuse.
Lesson 3 begins by considering what it means to own something, asking questions like: What are the privileges and limitations that come with ownership? Are the privileges and limitations of owning a ski-lift ticket different from owning a house? from owning a pet? How is owning a gun different from owning a skateboard? Can we own things like air, water, or a beautiful view? Students use economic thinking to sort through the tangle of ownership by comparing the characteristics – definition, transferability, exclusivity, and enforceability – of property rights to various products and resources. In the process, they discover that the nature of property rights influences people’s actions and their relationships with one another.
When applied to the study of increasingly scarce resources like water, this discovery offers two significant insights:
- the way we define property rights matters; and
- disputes over the use of resources are minimized and more easily settled when property rights are clearly defined.
Activity : The Rules of Ownership