The Free Rider ProblemThe free rider issue has become one of the most serious economic issues today.
The free rider is a lazy type person who wants the benefits that others bring in without having to do the work. The free rider typically takes advantage of a public good.Living in a civilized society presents many opportunities for free riding, which we have yet to find a way to control. Economists regard the possibility for free riding as a problem for the free market, which usually leads to government intervention.
Government intervention is not generally needed in a free market society but in this case if there were no government intervention this problem would not find a solution.The free-rider issue is often seen as a serious problem because of the assumption that a free rider’s best self-interest is that they interact with others by force and fraud. If they can get away with the fraud and begin to gain the benefits of others they have reached their first goal. Their next goal is to make some good money or get credit for someone else’s hard work before they get caught. Then they get out and are long gone by the time anyone notices.
Life in a civilized society allows each of us the opportunity to enjoy the benefits of the work of people with productive ability far greater than our own, but what happens when people begin doing this? They get used to not having to do much work and become lazy. In some cases people look at welfare in this way. If a person is able to get a good job and chooses not to, but instead, to live on our government, this would be considered free riding. This causes a fluctuation in our market and it can have a negative effect.
When the benefits go away people do not want to go back to work and eventually will loose their jobs or quit and become a true free rider. Clearly there is an essential difference between cases in which one can’t contribute to the benefits one enjoys and cases in which one chooses not to make a contribution that is within one’s power. But apart from this distinction, we can differentiate between harmless free riding and the worthless free riding. The free rider wants anything he can get for free and will think nothing of it if he can get away with it. Free riders take advantage of public goods without having to contribute to them.
For example, if society decides to encourage people to use less of a product and many people actually respond to this call, the product’s market will improve. Although the free rider may continue using this product, he will benefit.This creates a tremendous problem for activists who attempt to start a movement to improve the environment. Many people, seeing no incentive to join personally in the movement, just continue behaving the way they did before and yet reap the benefits of other people’s work. When everyone acts as a free rider, no benefit at all will come from the proposed action. Because it is in everyone’s personal interest not to participate in the collective movement, the movement is highly vulnerable to failure.
Though society as a whole may try to conserve a resource, the free rider can easily take advantage of this by not participating in the conservation effort. Those who believe in the concept of the free rider and the problems such people create might advocate government policy to require everyone to take part in efforts to improve the environment. Such people might contend that government action is the only fair and reliable way to prevent environmental problems. David Hume recognized the free-rider problem associated with public goods, even before the time of Adam Smith’s writings. Each citizen who can enjoy the benefit of a public good has an incentive to try to lay the whole burden of provision on others, whenever the exclusion of nonpayers is very costly or impossible.
Markets work to exhaust the gains from trade and cooperation because each individual has an interest in finding and capturing any and all such gains. Of course, when free