Community Organizing and the Free-Rider Problem


As a community organizer, I am all too familiar with the free rider problem and with economically rational ways to circumvent it. Under the right conditions it’s not as daunting as it first appears.
I’ve seen two classical ways around the free rider problem. The first is democracy- everyone makes a decision to invest collectively and then contributions are mandatory (ie taxes.) The second involves punishment, in a multi-stage game free riders can be punished for their actions, creating a an incentive for everyone to chip in.

Unfortunately as a community organizer I don’t have access to either of these tools. I don’t have the authority to impose taxes, and punishing free-riders tends to just drive people away. Assuming I have no leverage over the people that I’m trying to organize, how can I ever motivate them to collaborate around a public good?
The answer, in my experience, has to do with transaction costs. Let’s say I’m hosting a potluck. Under strict economic logic, no one should bring food. Since people who don’t bring anything still get to eat, all of my guests should come empty handed. Is bringing food to the potluck an irrational behavior?
Guilt and game theory aside, bringing food to a potluck lets my guests invest in their relationships with me and the other people at the party. This investment lowers transaction costs within that network of relationships, and those lowered transaction costs can far outweigh the cost of some tofu pad thai.
Say that I’m looking for a job. Job searches typically have high transaction costs, and I’ve been fruitlessly cold calling and sending off resumes to no avail. By bringing my tofu pad thai to the potluck I can ingratiate myself to people who might know potential employers, possibly lowering the transaction cost of finding a job.
The same holds true if I’m worried about the transaction costs of organizing to improve my kids’ school or of finding a date. Communities that have some form of shared investment tend to be closer-knit, and therefore more transaction-friendly, than those which don’t.
The trick as a organizer, then, is to create a community which meaningfully lowers the transaction costs of people investing in a shared (or even public) good. The League of Pissed Off Voters performs a public service by putting voter guides together for young people and distributing them around the city, but the League’s all-volunteer membership stays involved because it lets them become close to a tight-knit network for young progressive activists.
If anyone is looking to grab a beer and talk politics or to organize a rally, transaction costs are low. Though we all believe in the group’s mission, the achievement of that mission is not ultimately what keeps us engaged in the group. Grassroots organizations which reward their members only with altruistic feelings tend to fall apart quickly, ones which built highly valuable communities among their volunteers tend to last.
Economically this means that the free-rider problem is soluble whenever
a) the people benefiting from the shared or public good can benefit from low transaction costs with one another
b) contributions to the shared or public good can be recognized
All you have to do is create and maintain a mechanism for contributors to form relationships with one another, and the rest will sort itself out.
David Jay is a current MBA student at the Presidio School of Management

The Presidio Buzz is an ongoing project by MBA and MPA students and alumni of the Presidio Graduate School. Please click here to be directed to the main Presidio Buzz page.