Mancur Lloyd Olson (1932–1998)

Mancur Olson had the rare ability to explain clearly the subtle nature of how groups of human beings organize to educated readers who are not versed in economic theory and its arcane vocabulary. His first book The Logic of Collective Action: Public Goods and the Theory of Groups, first published by the Harvard University Press in 1965, presented the fundamental issues of group formation by self-interested individuals in a way that made sense to most readers. He made a serious and successful effort to connect his theory with the scholarly writings on groups by sociologists and other non-economists. This book influenced the thinking of many academics and non-academics.

The technical term for the principal inherent problem of group formation is called the ‘‘free rider problem’’. If all members of the group receive a benefit from the action of the group and are not forced to contribute to the cost of group action, a self-interested group member has no incentive to contribute. As an example of this ‘‘problem’’ consider the case of the classical music station KMFA in Austin, TX. This station plays classical music of all sorts 24 hours a day. The station does not receive any public funds. The existence of this station depends on voluntary contributions from people who value the existence of the station. The number of people in the Austin area who contribute is a fraction of the people who listen to the station. The bi-annual fund-raising drives attempt to shame those listeners who do not contribute to pledge monetary support.

This chapter is a reprint of an essay that first appeared in The Encyclopedia of Public Choice edited by Charles K. Rowley and Friedrich Schneider and published in 2004 by Kluwer Academic Publishers, Volume I, pp. 284–286.