Free Rider

The free-rider phenomenon pits individual selfinterest against the interests of the community as a whole, and it has major implications for the way in which a community provides public or collective goods. Free-rider problems occur when individuals can enjoy the benefits of a good or service whether they pay for them or not. Free riders tend to emerge if the consumption of a good or service is not rivalrous, that is, when consumption of the good by one person does not reduce or limit the consumption of the good by other parties. National defense and public television are examples of goods whose consumption is not rivalrous. Individuals maximizing their self-interest may not state their willingness to pay for such goods, as they believe the goods will be provided even if they don't pay.

As public goods are typically nonrivalrous in their consumption, free-rider problems typically arise with the provision of public goods. As the philosopher David Hume noted in the eighteenth century, individuals incline toward freeing themselves of the “trouble and expense of … [providing for the common good] and lay[ing] the whole burden on others” (Kaul, Grunberg, & Stern 1999, p. 6). If citizens were asked, for example, how much they would voluntarily pay to maintain the police and court system, many would suggest an insufficient amount because they assume that, with other citizens also paying, the amount they themselves need to provide is smaller than it actually is. Since in general each individual tends to assume that the rest of society will make up for any stinting on his or her own part, relying on voluntary contributions would tend to result in a chronic undersupply of critical public goods.

Free-rider problems also affect other forms of collective action. One country may avoid signing an international pollution control agreement that many others had signed because they believe they will benefit from the efforts of the other countries without needing to comply themselves. Some residents may not donate time to a neighborhood crime watch because they assume that they can enjoy the benefits of improved safety at no cost, thanks to the efforts of those neighbors who do volunteer.

Altruism, social solidarity, and, in some cases, rationality can overcome free-rider behavior. One can point to vast voluntary and nonprofit efforts to provide collective goods, whether those goods be soup kitchens, affordable housing, road building, or health care. The desire to donate time and resources to such activities can arise from feelings of altruism or social solidarity—the recognition that the entire community will be better off if people act to help others. Voluntarism can also be a rational response to a situation: Some members of a community may contribute money for local road improvements, for example, because the value of the improvements to the contributing individuals exceeds the worth of their individual contributions.

Are the motives behind voluntarism strong enough to allow for a large-scale substitution of voluntary provision of public goods for government provision? Most voluntary efforts are supplements or complements to government provision. Churches and other nonprofit voluntary efforts may add collective services to a core of essential service provided by government. However, when society relies too heavily on voluntarism to provide public services, the level of those services may be inadequate to meet needs, especially if demands increase rapidly (as during a depression). Because of the tension between individual and collective consumption, a “coercive” system of taxation to secure adequate provision of critical public goods remains necessary.

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