Economics by Good Neighbors: Collective Action Problems
Collective Action Problems
Though I could tell you lots of stories about my fantastic neighbors, this one will focus on the tail-end of a walk. I turned the corner to find my neighbor, Scott (name changed), poking into a large puddle at the edge of the curb with a stick. I knew immediately what he was doing: being a hero.
Every time it rains in Chicago, the same thing happens: roadsides flood, corners become impassable, and pooling water limits parking. The cause? Storm drains clogged with leaves, trash, and debris.
This is a textbook example of what economists call a collective action problem.
It’s a hassle for pedestrians and a hazard for anyone with limited mobility. Yet most people either get their shoes wet trying to tiptoe around the issue or avoid walking altogether. I also realized something else: many of the worst puddles formed right in front of business entrances. (See pictures: Starbucks, Nando’s, Massage Envy dozens more could have been included.) This issue had to impact walking traffic and commerce to those businesses. I’ll bet it even slows the velocity of money when potential walk-in customers think to themselves, “Oh it rained yesterday, I’ll walk there next week.”
Pedestrians and business owners alike have an incentive to solve the problem. But the fact that others might benefit (whether the store down the street, or other pedestrians) make individuals hesitate. There’s lots of people in Chicago, why should they be the one to do the chore?
Economic Theory
The work of Mancur Olson in The Logic of Collective Action: Public Goods and the Theory of Groups (1965) defines a lot of the way’s we think of collective action problems today. Olson’s observations are pretty intuitive you’ve ever been in a group project for school or a collaboration at work where it’s obvious some in the group are pulling more weight than others.
Olson argued that collective action becomes more difficult as group size increases, due to three key factors:
Individual Benefit: An individual is most likely to work hard when all the benefits go to them. Collective action problems tend to occur when benefits are spread across a large group. This could be a walkable sidewalk, a collective grade for a group project, and even company bonuses.
Difficulty Monitoring: Economists colloquially call an individual who’s not pulling their weight a “free rider”. Free riders are hard to pick out in a crowd. This is especially true for groups with no clear leader or groups performing tasks without clear boundaries. The easier it is for an individual to fade into the crowd, the more free-riding you can expect.
Loss of Selective Incentives: by “selective incentives” Olson means rewards or punishments that apply to individuals. Even if it’s obvious who is contributing and who is not, if contributions are not rewarded or free-riders are not punished, it doesn’t really matter.
Chicago Weather: a collective action problem
There are two primary ways economists approach collective action problems. Most effective solutions rely on one or the other or, sometimes, a mix of both. In short, to solve a collective action problem you define who is responsible.
Let’s look at snow removal, another weather-related challenge that Chicago actually handles pretty well using two different strategies.
1. Make it the Government’s Problem (Collective Taxation and Systemic Action):
In the event of a snowstorm, Chicago sends out plows en masse. They quickly clear highways and arterial roads, salting the pavement to ensure traffic can keep flowing. This is funded by taxes and managed centrally.
2. Make it the Individual’s Problem (Assignment and Liability):
For Chicago’s sidewalks, it’s a different story. Chicago law holds property owners responsible for clearing snow within 15 hours. This applies to both homeowners and businesses. The result? Shovels come out, and most people take care of their patch. (Admittedly, I have some neighbors who don’t. But overall the system works fairly well.)
Transparency and Accountability:
Both of Chicago's approaches to snow removal include ways to address free riders:
Streets: The Chicago Plow Tracker not only shows that the city is actively managing snow removal but also provides tools to request service or check if your car was towed for blocking plows. (Note: the link will show you the site, but the interactive map fires up when there’s snow.)
Sidewalks: If a neighbor hasn’t cleared their sidewalk within 15 hours, you can report the violation directly to the city.
Transparency (plow tracker) and individual accountability (reporting violations) are not perfect solutions, but they are means to galvanize address the problems Olson points out. This breaks the negative loop of collective action: when individuals do not take action, nothing gets done.
Conclusion: Scott’s a Hero
Unfortunately, Chicago hasn’t found the right solution for it’s drains just yet.
But there’s another way to address collective action problems, at least in the short term: individual volunteerism. Scott didn’t have a city contract or an ordinance to follow. He just wanted to cross the street without soaking his shoes and help the next person do the same. Sometimes, solving a collective action problem starts with one person picking up a stick. Sometimes these actions act as a catalyst, inspiring others to take action themselves. Case in point: after running into Scott I grabbed an old broom and got to nearby drain that had frustrated me on my walk.
You're a hero, Scott.
A picture of Scott . . . basically.