Friday, March 30, 2012

Free-Rider Problem

The free-rider problem has been discussed a fair amount in the past few weeks in talking about health insurance, and the more I hear about it the less certain I am that there is really such a thing. There are free-riders, of course, in some sense of the term, but people rarely define the sense in which they are using it, and when you try to pin it down, the sense in which the free-rider problem constitutes a genuine problem becomes very elusive. For instance, children are in some sense always free-riders. Infants don't pay taxes; in fact, they don't do much at all except inconvenience other people. But they benefit from all sorts of collective action. If you look at the definitions most people use to describe free-riders, infants are clear examples, receiving benefits they do nothing to support. But obviously there is no problem with infants riding free on the system. No one complains that infants get the full benefits of fire, police, and other emergency services despite not contributing to the support of these services. Likewise, nobody claims about the massive free-rider problem of children receiving rather expensive public educations on public dime, all paid for by people who are manifestly not children.

Thus the mere fact that anyone is riding free on the system doesn't mean that there is any actual problem. If people receive services to which they are entitled, but are actually unable to help pay for them, there is likewise no free-rider problem: if they're entitled to the services independently of whether they can pay, then they are fully within their rights to take the services whether they pay for them or not. If the entitlement doesn't depend on the payment, who is paying for the service is a completely different issue from who is receiving it. The one is simply not relevant to the other. And in fact a lot of services and benefits are set up this way precisely so that no one will miss out even if they can't pay. It's not the only reason, but it is one of the reasons we engage in collective action in the first place -- so that some people can ride free, if they have to.

What most people are really talking about when talking about the free-rider problem is evasion of the responsibility to contribute, perhaps combined with the question of how to make the system sustainable. But this is a completely different matter from people receiving benefits and services to which they do not contribute. We see this with the infant case: the reason there is no problem with infants riding free on the system is that they have no responsibility to contribute. But the reverse direction shows it as well: someone may have the responsibility to contribute even if they themselves don't benefit at all. We see this with taxes: as a citizen your tax responsibilities are set without any regard whatsoever for whether you get any benefits at all. To be sure, virtually everyone who pays taxes does receive benefits that are supported by taxes. But there is no intrinsic necessity to this, and the responsibility itself is not fixed (for instance) with any concern for whether the rich are getting their fair share given all that they put in, or whether they are in fact just subsidizing a lot of poor people who can't pay taxes. The sort of collective action involved in government simply doesn't work that way. We do it because we all recognize the benefit; only then does the practical problem arise of how to make the benefit sustainable, and this happens any way we can manage it. Only in light of this plan for sustainability does the responsibility to contribute actually get decided, and the best plan for sustainability might well allow for, or even guarantee, free-riders. And if it's really the best plan for sustainability, there is simply no problem with there being free-riders.

So the problems people are really talking about have nothing whatsoever to do with whether anyone is riding free on the system; what people are really talking about are responsibility-evaders who endanger the sustainability of the system. Whether the free-riders are responsibility-evaders, or vice versa, has to be shown, not assumed. And thus the whole talk of free-riders ends up being otiose and obfuscating; all the work is done by assumptions about who is responsible for contributing. Which is perhaps a good thing, since if we actually understood 'free-rider problem' as broadly as Hardin does in the SEP link above, we are almost all free-riding almost all the time.

I think the problem here is that there is a genuine abstract 'free-rider problem', in game-theoretical discussion of the logic of collective action, that has begun to be used to model all sorts of behaviors that don't necessarily meet the original game-theoretical assumptions (e.g., that responsibility is equal or at least proportional to ability to contribute and that the benefits are made possible by consent of the contributors), and which has no moral or political implications on its own, being simply a problem about optimal and suboptimal strategies. But we all know the irritating character of the Freeloader who manages unfairly to get by on our work rather than his own. So the combination of these leads to people using some loose, vague mix of these to describe all sorts of situations that seem unfair. But it doesn't actually contribute anything. What you really want to know is whether the system is worth it, whether it is sustainable, what division of responsibilities is best for sustaining the worthwhile systems, who is actually evading their actual responsibilities, and what can be done (if anything) to prevent such evasions. These make the problem precise, whereas it seems to me, more and more, that 'the free-rider problem' is just thrown in as a vague diagnosis without much critical examination, and always signals that the discussion is going to become less useful.