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.