Self‐interest and collective action: The economics and psychology of public goods

Abstract

Social psychology has become increasingly interested in problems posed by social dilemma situations such as ‘The Tragedy of the Commons’, where individuals acting in their own self‐interest end up being worse off than if they had considered the interest of the ‘community as a whole’. The paper attempts to integrate social psychological thinking in this area with the economic theory of public goods. The economic distinction between private and public goods centres around the issue of ‘excludeability of consumption’: in contrast to private goods, which can only be consumed by the purchasers, a public good (e.g. clean air), once it has been provided, can be consumed by everybody, regardless of whether they contributed towards it. This non‐excludeability of consumption induces ‘free‐riding’, i.e. the temptation to share in the consumption of the public good without contributing to its provision. The temptation to free‐ride is assumed to increase with increasing group size. The paper reviews evidence relevant to the free‐rider hypothesis from four areas: behaviour in experimental games, simulations of market transactions, group productivity, and helping behaviour in emergency situations. It is argued that each of these situations involves the provision of a public good and evidence of free‐riding as well as support for the relationship between free‐riding and group size is presented. Based on the economic theory of public goods, a psychological interpretation of these findings is developed.