Ride along

Free riding is the temptation to withhold a costly contribution while continuing to enjoy benefits supplied by others. It is not simply selfishness in the abstract: it is a strategic response to a shared arrangement in which an individual can benefit without paying, but whose benefits may disappear if too many people make the same choice. The book follows that logic from businesses that wait for someone else to repair a flawed system to taxpayers and laboratory groups, where trust and the prospect of punishment shape whether cooperation survives.

The Individual Incentive and the Collective Cost

In the television industry, networks, stations, and advertisers could all gain from replacing the monthly sweeps ratings system with a better one. Yet no single participant expected to benefit enough to justify paying for an alternative. Local advertisers in Sioux Falls might welcome accurate ratings for the local CBS affiliate, but their spending would not warrant investing in people meters for the town. ABC might prefer to avoid stunt programming, but a more accurate local-rating system offered it little direct economic return. If the industry acted together, everyone would enjoy the improved system, including those who had contributed nothing. Each therefore had an incentive to wait for others, and the shared reform stalled.

That impasse illustrates the collective-action problem described by Mancur Olson. In the account given here, all doctors could benefit from the American Medical Association’s lobbying, while any one doctor’s effort would make little difference to its success. Olson consequently doubted that members would volunteer to do the work; organizations, he argued, needed selective benefits—such as health insurance or the AMA’s medical journal—to give people a reason to participate. Even with such incentives, writing to Congress or attending a rally could remain difficult to organize. Free riding is the individual calculation that someone else can supply the effort while the benefits remain available to all.

The possibility of cooperation complicates, but does not erase, that calculation. People do sometimes contribute to the common good, and the book cautions against treating Olson’s critique as universally applicable. But willingness to cooperate in a group does not guarantee that businesses will do so. Enlightened self-interest depends on taking a longer view; corporations, perhaps encouraged by investors, can be myopic. The organization of the television industry further exposed its participants to the collective-action trap.

Shared Goods and Tax Compliance

Taxpaying offers a broader example because many publicly provided goods are nonexcludable: people can benefit whether or not they personally pay. Taxes fund national defense, schools, roads, police and fire protection, and basic scientific and technological research. A national missile defense system, if built, would protect a household whether its occupants had paid taxes; once I-95 was built, anyone could travel on it. From a narrow individual perspective, withholding one’s contribution can therefore seem advantageous. If most people did so, however, the resources supporting shared goods would disappear.

Law alone may not secure participation. Tax evasion is illegal, but the book notes that in 2001 the IRS audited only 0.5 percent of returns. In purely economic terms, the low chance of detection could make cheating appear rational. A functioning tax system therefore depends on voluntary compliance, even when taxpayers pay reluctantly: the collective benefit materializes only if people take part.

That participation rests in part on reciprocity. Margaret Levi’s term for Americans willing to pay their fair share only when they believe others are doing likewise is “contingent consenters.” Compliance also depends on believing that those who evade taxes may be caught and punished. The concern is not merely that others might break the rules, but that they might do so successfully while compliant people bear the cost. As the book puts it, people want to do the right thing, but no one wants to be a sucker.

How Cooperation Unravels

The public-goods experiments run by Ernst Fehr and Simon Gächter make the incentives concrete. Each round, four players decide what to do with twenty tokens apiece, over a game lasting four rounds. A token contributed to the public pot costs its contributor one token, who personally receives only 0.4 back; each of the other three players also receives 0.4. The group thus gains 1.6 tokens for every token invested. If all four keep their tokens, each ends with twenty. If all contribute everything, each ends with thirty-two. Yet any one player can do best by keeping their own tokens and benefiting from the other players’ investments—provided those investments continue.

Across versions of these games played in the developed world, most people do not begin as consistent free riders. They typically contribute about half their tokens. But as rounds pass and players observe others withholding contributions, the amount given to the common pot falls. By the end, 70 to 80 percent of players are free riding, and the group is poorer than it would have been with sustained cooperation. What begins as a collectively beneficial arrangement is weakened by the visible experience of others taking advantage of it.

Fehr and Gächter’s account distinguishes three broad patterns of behavior. Roughly 25 percent of participants are selfish in the economic sense: they free ride throughout. A small minority are altruists who contribute heavily from the beginning and continue even when others do not. The largest group consists of conditional consenters. They start by contributing at least some of their wealth, but reduce or stop their contributions when they see others free riding. By the end of most games, almost all of these conditional contributors have withdrawn their cooperation. Their behavior makes the group’s fate depend not only on the persistent selfish minority, but on whether the larger, conditional group continues to regard participation as fair.

Visibility, Punishment, and the Conditions for Cooperation

The experiments also test what happens when free riding is made visible and can be punished. At the end of each round, participants learn how much each person contributed. They can then spend a third of a token to take one token away from a free rider. Participants use this option to punish, even though doing so is economically irrational for the punisher. The free riders, in turn, begin contributing their fair share. More strikingly, contributions continue in the final rounds even when punishment can no longer be imposed. The prospect of accountability changes behavior beyond the moments when a penalty is immediately available.

The result identifies a practical hinge in the cooperation problem: conditional consenters must not be made to feel that they are the only ones carrying the cost. In the book’s account, trust in neighbors supports tax compliance because it encourages the belief that others will meet reasonable obligations. Trust in government is distinct but also relevant: taxpayers are more willing to pay when they believe the government will spend their money wisely and in the national interest. The experiments’ visible contributions and sanctions offer a parallel mechanism. When participation can be observed and free riding has consequences, cooperation is less likely to collapse into a contest in which each person waits for someone else to contribute.