High Speed 2 and the logic of collective action

In a 1965 book, The Logic of Collective Action, the American economist Mancur Olson explores the impact of special interest groups on the political process.

Olson’s hypotheses are derived from what has been termed the ‘free-rider’ problem. If a consumer or worker contributes a few days or dollars to lobby for favourable legislation, he or she will have sacrificed time or money, yet that individual will, at best, succeed in advancing the cause to a small, often imperceptible, degree. It is therefore rational for the individual to let somebody else do the work, thus gaining the benefits at no cost.

Olson contends that if behaviour is both voluntary and rational, then neither government, nor lobbies, nor cartels can exist unless individuals support them for some reason other than the collective goods they provide. While governments are supported by compulsory taxation, other organisations are supported by selective incentives, which can suppress free-riding. Examples of these include intimidation, companionship, respect for colleagues, and the fear of social ostracism. Furthermore, in the absence of selective incentives, the incentive for group action diminishes as group size increases because the benefits accruing to a particular individual declines for a given amount of effort.

There are three separate factors that keep larger groups from furthering their own interests. Firstly, the larger the group, the smaller the fraction of the total group benefit any person acting in the group interest receives. Secondly, the larger the group, the lower the likelihood that any small subset of the group will gain enough of the collective good to bear the burden of providing even a small amount of the required action. Thirdly, the larger the group the greater the organisation costs, and thus the higher the hurdle that must be jumped before any of the collective good at all can be obtained.

According to Olson, very large ‘latent’ groups have no incentive to act to obtain a collective good. Only a separate and ‘selective’ incentive will stimulate a rational individual in a latent group to act in a group-oriented way. An example of such incentives would be the intimidation tactics of some large trade unions as observed in the 1984 miner’s strike. More positive selective incentives include the free entry to stately homes and wildlife reserves offered to members of conservation charities.

Smaller groups (those with a low number of individual members) can use their resources more effectively and act more decisively because their members have fewer free-riding opportunities. Social pressure and social incentives operate more effectively in groups of smaller size, especially where members have face-to-face contact with one another.

The logic of collective action suggests that because of the different incentive structures facing individual members, there is a strong tendency for small concentrated interests to be able to exploit large dispersed interests in the extraction of ‘rent’ from government. Collective action problems make it extremely difficult for large dispersed interests to organise themselves into effective lobbying organisations. Olson claims that empirical evidence shows this to be correct for both United States and for the rest of the world; ‘in no major country are large groups without access to selective incentives generally organised.’

Olson’s theory suggests that policy debates will tend to be dominated by small, concentrated interests, with large dispersed groups having little direct influence. This certainly appears to be the case with High Speed 2. The main losers are taxpayers – a very large ‘latent’ group – who are being forced to fund the scheme, yet active involvement in the policy debate has largely been restricted to concentrated interests such as senior council officials, rail/engineering firms and groups of local residents along the route.

The role of interest groups in high-speed-rail policy is examined in The High-Speed Gravy Train: Special Interests, Transport Policy and Government Spending.

Deputy Research Director & Head of Transport

Richard Wellings was formerly Deputy Research Director at the Institute of Economic Affairs. He was educated at Oxford and the London School of Economics, completing a PhD on transport and environmental policy at the latter in 2004. He joined the Institute in 2006 as Deputy Editorial Director. Richard is the author, co-author or editor of several papers, books and reports, including Towards Better Transport (Policy Exchange, 2008), A Beginner’s Guide to Liberty (Adam Smith Institute, 2009), High Speed 2: The Next Government Project Disaster? (IEA , 2011) and Which Road Ahead - Government or Market? (IEA, 2012). He is a Senior Fellow of the Cobden Centre and the Economic Policy Centre.

3 thoughts on “High Speed 2 and the logic of collective action”

  1. Posted 19/08/2013 at 13:24 | Permalink

    It may be true that the public policy debates will tend to be dominated by those with an axe to grind; but that doesn’t explain why civil servants and elected politicians, who are surely supposed to be acting on behalf of the whole community, should pay much attention to them. There seems to be an assumption that most democratic politicians would willingly sell their grandmothers for a few more votes at the next election. If that is true, it is a sorry reflection on our times. There’s an interesting passage in Nevil Shute’s autobiography ‘Slide Rule’, where he raises the question why Air Ministry officials, who (he says) must have known that quite abnormal and unjustifiable risks were being taken with the experimental airship R.101, failed to speak up when the question of the issue of a certificate of airworthiness was under discussion. His own answer is that the men in question put their jobs before their duty. Shute goes on to speculate that maybe none of those men had any substantial private means, which would have made it more likely that they would be willing to express their own honest independent opinion. But it surely can’t just be a question of personal wealth: if it were, our present cabinet would be as well placed as any for a hundred years to express honest independent opinions.

  2. Posted 19/08/2013 at 18:31 | Permalink

    How possible would it be for the whole of the UK to get behind a northern European link with plain and simple strategic nodes [beyond London] at the A) Preston & B) Perth stations as follows; and could the taskforce make comment on this (if not wishful thinking on my part)? As an architecturally trained and minded person, I imagine it would engage and give decades’ unrealised purpose to A) the colossal and centrally/strategically placed Preston Bus Station & Car Park; and of course B) the Forth Rail Bridge – an HSR-ready structure already – respectively. It would mean travelling [democratically] to England or Scotland in style and with choice, but above all would mean business. Slowing down a highly potential HSR network by planning to link it to the post-industrial cities/conurbations is surely counterproductive and vastly uneconomical. The above infrastructural clues (utilising veritable World-Wonders) are there by chance, let’s use them and put the UK on the map: quicker; for real; and for much cheaper, especially if genuinely feasible/sustainable, which I’m imagining is probable. I doubt this is the case as per the current proposal. Perhaps some creative and constructive criticism might spark thoughts on something truly economic, but when or how?

  3. Posted 22/08/2013 at 08:16 | Permalink

    Oh I almost forgot: we are in what we call a ‘developed country’, and not quite ready to ‘develop’ again as a country, hence as [simply or complexly] corroborated in the IEA report. We are happy to be capitalistic from within the comfort of our shell, i.e. the post-industrial city. Therein, lays the problem. Yes, enough risk and reward has whet our economic appetites, but no real gain is possible that thinks railways, like airways, can stop off at any old city en-route to the 7 north of the border. Getting from England to Scotland (A to B) by rail would instead be the endeavour of a ‘developing country’; i.e. something that we’re too ashamed, blindly greedy, or fearful to enact. It appears to me to be a dilemma that’s already reached its cultural zenith as well. On the BBC the other day was Lyndhurst saying “Only Fools would never be made today”, ergo even TV companies are unwilling to ‘develop’ talents/audiences on the premise that the formula is already developed, or cannot develop and grow. The smell of success might be just too sweet for our liking! If so, the UK can have my ‘…to Preston to Perth’ idea for free to prevent Scotland from becoming a Brigadoon upon the sanctioning of the current HS2 proposal.

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