Collective Decision Making

Applications from Public Choice Theory

Clifford S. Russell

• Publisher: RFF Press
• Year: 2013
• ISBN:
  9781135997014
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

First Published in 2011.This is Volume 11 of fourteen in the library collection of Policy and Government and looks at the applications from public choice theory on decision making. It brings together proceedings that look seek to answer the question for the forum, which was whether public choice theory offers promise of providing a firmer foundation for applied institutional research and for institutional innovations which could contribute to the solution of some of these problems.

Robert Cameron Mitchell

National Environmental Lobbies and the Apparent Illogic of Collective Action

Mancur Olson's The Logic of Collective Action was first published in 1965. In 1968 it appeared in paperback, and a revised edition of the book, both hard and softcover, was published in 1971. Though written by an economist, the work's conclusions are, as he points out, "as relevant to the sociologist and the political scientist as they are to the economist" (Olson, 1971, p. 3). If anything, this is an understatement, as the work directly challenges long-held paradigms in both of those fields by the simple expedient of applying to the study of groups and organizations the assumption that individuals are rational and act in a self interested manner. Nevertheless, it has taken sociologists and political scientists more than a few years to come to realize its relevance. Now the news is out, however, and in the past several years an increasing number of scholars in those disciplines have been enthusiastically plowing the old fields of interest groups and social movements with the new plow of Olsonian rational choice analysis. Most find it too radical an innovation to adopt en toto and yet so provocative and suggestive that they are forced to rethink some fundamental questions about collective action. This activity has expressed itself in critical analyses of the model itself; in a reworking of the disciplines' existing paradigms in light of new insights gained from Olson; and, lately, in attempts to test the resulting theories empirically. Thus far the critique of Olson is well advanced, some very useful reconceptualizations of fields such as social movements have occurred, and the empirical testing is in its infancy.

Since the publication of Olson's book, and in apparent defiance of his logic, the numerous groups comprising the "public interest" movement have attracted sufficient public support to become viable and important lobbies for public goods of various kinds. Since Olson has cited the absence of such lobbies as an important confirmation of his theory, their obvious presence seems to require some explanation. Such empirical studies as have been conducted also suggest that the time has come to rework his theory. For example, four of these studies are of large economic interest groups such as the Canadian Teacher's Association (Manzer, 1969), the U.S. Conference of Mayors (Browne, 1976), the Confederation of British Industry (Marsh, 1976), and the Minnesota Farm Bureau (Moe, 1977). These organizations are precisely those most likely to conform to the Olson model (Moe, 1977, p. 36) and yet each of these studies finds Olson's theory to be a useful but less than fully adequate explanation for why members join these groups. Tillock and Morrison's Zero Population Growth Study (1979), the one empirical study of a public interest group in the literature, is even more emphatic about the theory's failings.

I agree with Brian Barry (1970) that more theoretical work is needed before useful empirical tests can be undertaken. I consider in this paper the applicability of Olson's model of collective action to a particular set of organizations that lobby for public goods—the national environmental public interest groups with general public membership. By systematizing and extending the work of a number of Olson's critics, most notably Denton Morrison and Terry Moe, I develop a revised rational choice theoretical paradigm of collective action to explain why individuals contribute to environmental lobbies. My current work on national environmental groups is not sufficiently advanced to provide an empirical test of the issues involved, so this discussion is limited to conceptual and qualitative analysis.

I. The Olson Paradox

According to Olson's theory or latent groups", rational individuals in "latent" groups¹ have no incentive to form or to contribute to organizations which seek to further their common interests by lobbying. This is so even when there "is unanimous agreement in a group about the common good and methods of achieving it" (Olson, 1971, p. 2). As he correctly points out, the then-prevailing sociological² paradigm tended to assume that holding common interests was sufficient in itself to motivate spontaneous collective action to obtain collective goods. This assumption led students of social movements, for example, to focus their analysis primarily on the grievances and social characteristics of movement participants.³ Olson argues, persuasively I believe, that this approach ignores certain important properties of collective goods and large organizations which make collective action problematic.

Collective goods are nonexcludable (Peston, 1972) or nonexclusive (Olson, 1971). They are available to everybody in a group whether or not he or she has contributed to the attainment of these goods. The rational, utility-maximizing person, it is argued, will not be inclined to help achieve a group benefit which will then be enjoyed equally by those who do not contribute. He or she will be inclined to take a free ride, too. In addition to the free rider problem, Olson identifies two other properties of large groups which mitigate against the rationality of collective action for collective goods.⁴ (1) Each individual's⁵ contribution will be such a small proportion of the group's resources that he will view it as inconsequential in affecting the outcomes of the group's action: the inconsequentiality problem. (2) The costs of organizing large groups are considerable, creating a hurdle that must be jumped before any of the collective goods can be obtained: the organizing problem (Olson, 1971, p. 129). This leads to the conclusion that

. . . however valuable the collective good might be to the group as a whole, it does not offer the individual any incentive to pay dues to any organization working in the latent group's interest, or to bear in any other way any of the costs of the necessary collective action (Olson, 1971, pp. 50-51).

In this situation "only a separate and 'selective' incentive will stimulate the rational individual in a latent group to act in a grouporiented way" (1971, p. 51, emphasis in the original). Coercion is one such incentive which is commonly employed by nations to collect income taxes as well as by labor unions who enjoy a closed shop. In the absence of coercion, it is necessary to supply positive incentives or private goods such as insurance policies, group travel discounts, and magazines.⁶ These are individual, noncollective goods which the individual can acquire only through membership in the group which lobbies for the collective good. Therefore what distinguishes the unorganized consumers, white collar workers, and migrant agricultural workers⁷ from the organized union laborers, farmers, and doctors⁸ is that the latter obtain their members by some combination of coercion and selective incentives (Olson, 1971, p. 135).

Olson's rational choice theory leaves virtually no room for collective goods or private moral goods such as self-esteem or guilt to act as a motivating force. In one place he writes that individuals will support the organization with a lobby working for collective goods only if the individual is coerced into it or has to support the group to get a non collective benefit (1971, p. 134). On the next page he uses the word "mainly" to describe the effect of coercion and private goods on why individuals join labor unions, farm organizations, and professional associations (1971, p. 135). In another place he justifies his lack of attention to moral incentives on the grounds that there will be "sufficient explanations on other grounds [presumably referring to selective incentives] for all the group actions to be considered here" (1971, p. 61). In his conceptualization, members' support for the organizations' lobbying activities is merely an unintended "by-product" of the support which they give in order to obtain the private goods which the organizations control (1971, p. 13). Thus the provision of selective incentives is a necessary and (largely) sufficient condition for organizing individuals into lobbies.

At this point it is necessary to distinguish two polar types of collective goods. Some collective goods are limited to particular groups of people, such as wages to workers in an industry, a more equitable distribution of the tax burden to middle and lower income people, and price protection and benefits to farmers. Within the group everyone benefits, with the usual free rider problems. I will call these group goods. The second type involves goods which are available to everyone in the society, such as the benefits of clean air, which is almost a polar case of this type (Freeman, 1971, p. 10; Peston, 1972, p. 15). An appropriate label for these goods is public goods and I will use the term here in this narrow sense.⁹

Olson's analysis is restricted to group goods, for the most part. Furthermore, the collective goods with which he is concerned are economic goods, in the sense that higher prices for agricultural products, higher wages for union workers, and so on are directly stated in monetary terms.¹⁰ The national environmental groups, on the other hand, seek noneconomic public goods. They lobby for environmental amenities such as clean air, clean water, the preservation of endangered wildlife, open space, and wilderness. Put another way, they seek to diminish the impact on the environment of the externalities created by industrialization, urbanization, population growth, and the use of certain technologies, such as the internal combustion engine for small vehicles (snowmobiles and trail bikes). Is it appropriate to argue that Olson's theory should apply to the latent group of those who experience these externalities?

The answer to this question may seem to be clearly affirmative, since Olson announces boldly that "Logically, the theory can cover all types of lobbies. . . . It can be applied whenever there are rational individuals interested in a common goal." Neither does he limit it to just economic or material goods (Olson, 1971, p. 159). Nevertheless, in the brief section of the work which considers noneconomic lobbies, he goes on to qualify this statement; while the theory of latent groups sheds some light on certain noneconomic lobbies such as veterans organizations (which provide social goods at the local level), there are others for which it is not especially useful (Olson, 1971, pp. 159-160). He cites philanthropic lobbies and religious groups in this regard. Philanthropic lobbies are lobbies which seek goods for some group other than the group that supports them. Environmental groups would not fall into this category since their membership will share in the benefits achieved by their lobby, and they are not, of course, religious groups. He also cites the occasional band of committed people who work for causes which are admittedly "lost" and says that such "irrational" behavior can only be explained by recourse to psychology or social psychology, although the small size of such bands is consistent with his theory (Olson, 1971, p. 161). Environmental groups may be omitted from this exception too it would seem, as it would be difficult indeed to characterize their cause as hopeless.

It appears, then, that there is nothing inherent in Olson's theory that would preclude its application to environmental lobbies. Indeed, judging from his rather convoluted consideration of noneconomic lobbies (half the material in the six-page section on this topic is devoted to extended discussions in footnotes), such an exercise may help to clarify the extent to which the theory of latent groups is a general theory of common action to achieve collective goods, or merely a special theory.

II. Environmental Lobbies

According to the historian Roderick Nash, there were only seven national and two regional conservation organizations in existence in 1908 when the Sierra Club led the fight to preserve the Hetch Hetchy valley from being inundated in order to provide San Francisco with a reservoir. Considering just the groups that have an action program (which may involve education) and including groups whose main focus is population and wildlife as well as those with wilderness and pollution interests, there are today some 75 national groups and hundreds more at the state and local level.¹¹

The most visible and best known of the contemporary environmental organizations are the 15 large national membership groups which are listed in table 6. These include the National Wildlife Federation,¹² National Audubon Society, and the Sierra Club, to name the three largest. Several of the national groups also have local chapters—at the last count the Sierra Club had 250 local groups and National Audubon's chapters numbered 385. Reliable estimates of the number of Americans who were members of the groups in John Muir's time do not exist, but since the Sierra Club's membership in 1908 was only 1,000, the total cannot have been very large and surely amounted to far less than 1 percent of the adult population.

TABLE 6. Major U.S. National Environmental/Conservationist Membership Groups, Acronym, Date of Founding, and 1977 Membership

At the time of the founding of the Sierra Club and the Audubon movement at the end of the nineteenth century, the issues which concerned conservationists were largely restricted to the classic concerns of wilderness and wildlife. With the birth of the Izaak Walton League in 1922, water pollution was added to the list of environmental goods on the conservation agenda. By the 1950s, National Audubon had begun its long crusade against DDT, and the development of the extraordinarily wide array of issues which we now call "environmental" was well underway. Today these include not only wilderness and wildlife but also toxic substances, air and water pollution, energy, transportation, population, and recombinant DNA among others.

The term "lobby" is used throughout this paper to refer to activities directed toward the end of securing a supply of a collective good. For the environmental groups it encompasses a range of activities beyond classical legislative lobbying, such as the education of children and adults about the environment and wildlife. This is a traditional activity for most of the older groups, and the National Audubon Society and the National Wildlife Federation have especially extensive educational programs for all age levels. Such programs indirectly promote the supply of environmental goods by increasing the public's demand for them, thereby broadening the potential political base of support for their supply.

Although the development of Washington offices staffed by fulltime professional lobbyists is relatively recent, legislative lobbying efforts by environmental groups is not, John Muir, Gifford Pinchot, and the other early conservationists were skilled politicians who knew how to marshal public opinion through the press, how to stimulate massive letter writing campaigns, and which arms to twist in Congress.

Their organizations did not have to satisfy Internal Revenue Service requirements for a tax-exempt status, however. When the IRS cracked down on the Sierra Club and removed its 501 (c) (3) tax status in 1966, many environmental groups established parallel taxexempt foundations and joined other public interest groups in pushing for congressional action to loosen what they viewed as unfair restrictions on their legislative lobbying activity. This effort met with success in the passage of the Tax Reform Act of 1976. The act set new, specific ground rules by which groups can spend a portion of their funds on legislative lobbying while continuing to retain their (c) (3) taxexempt status. As a result, several groups, such as the National Wildlife Federation (NWF) and the Environmental Defense Fund (EDF), have now hired their first full-time lobbyists, and those (c) (3) groups who already had active legislative programs are now breathing easier.

The Washington offices of the national groups also monitor the administrative branch of the government to ensure that environmental consequences of governmental actions are taken into account, as the National Environmental Policy Act requires, and that the ...