68 Pages Posted: 29 Feb 2012
Date Written: February 28, 2012
There are two basic reasons why a citizen may choose to engage in political activity: She may wish to achieve particular results (“extrinsic motivations”) or she may simply enjoy engaging in the political activity itself (“intrinsic motivations”). However, most citizens’ ability to affect political outcomes is extremely limited, and attempts to do so impose real costs. Thus, citizens are strongly discouraged from acting on their extrinsic motivations, in the hope that others with similar policy preferences will act for them.
This article explores how this dynamic, known as the “free-rider problem,” pervades the democratic process and makes government less responsive, less efficient, and less accountable. It also illustrates how the free-rider problem tilts the political playing field in favor of those actors, particularly large corporations and unions, who are least subject to it. This article contends that the best solution is to provide citizens with resources (“Political Dollars”) that can only be used for political purposes. This approach directly addresses the free-rider problem because it makes engaging in political activity much less costly. This article argues that a Political Dollars program should reduce the cost of a broad range of political activities, give citizens the flexibility to allocate their Political Dollars as they see fit, and should not prevent citizens from contributing non-Political Dollars. This article considers alternative proposed reforms and concludes that they fall short because they do not squarely address the free-rider dynamic.
Keywords: free riding, politics, political process, political economy, campaign finance, legislation, interest groups, free rider problem, economics, law and economics, political science, lobbying, democracy, campaign finance reform, citizens united, public campaign finance, public funding of elections
JEL Classification: D72, D70, H11, H41, K10, K30
Suggested Citation: Suggested Citation