Hello everyone, today we will be discussing
Olson’s Theory of Collective Action.
This is one of the seminal theories that deals
with the collective action problems, or issues
related to the public goods and basically
his arguments fall in the broad disciplinary
area of economics and political science.
The book ‘The Logic of Collective Action’,
provides a very original thought on the theory
of group and the organizational behavior.
So, the theory explains that most organization
do produce collective goods, or public goods
and for that reason the members need to pay
for it.
But however, this logic is not meant for the
large groups and in most of the cases in the
large groups this provision of public goods
is not successfully provided.
So, in this context, the book is actually
a key document that can provide that why the
group members behave in a particular manner,
when their size is large or size is small.
It gives a kind of strategy for successful
provision of the collective goods, collective
actions and collective goods in the event
of the size of the group and the organization.
His book provides the logic of the collective
action for public goods and the theory of
groups.
The author has written this book in 1965 and
he is trained in economics; however, his writings
are more towards the social issues.
The major publications that he contributed
to the society are - the Logic of Collective
Action in 1965, Rise and Decline of nations
in 1982, and the Power and Prosperity in 2000.
All these ideas and arguments are actually
meant to the societal, problems and their
solutions.
The 
logic of collective action is an application
of economic reasoning to the group behavior,
what is the factors behind the group behavior,
why a particular group is behaving in a particular
manner in different situation, particularly
in providing the case of public actions or
public goods.
This book highlights two things: the individual
behaviour is different from the group behavior.
And why we are saying that individual behaviour
is different from the group behavior?
Because the common perception is that the
individual will behave rationally and that
is why they will always try to maximize their
self interest in order to achieve a particular
objective that is self interest.
And following this logic when this individual
will be in a particular group they will also
be guided by rationality and they will also
try to achieve the group objective.
This is behind the common perception we do
hove, but however, he has found that this
very perception is wrong.
Because individual behaviour in a particular
situation (that is in satisfying his own self-interest)
is different from the interest of the group
itself.
So, he will be guided by the principle of
rationalism, but whereas, he will be one of
the member in a group, he will not be guided
by that principle.
So, that is why the individual behaviour and
group behaviour for a particular individual
is also different.
So, this is in contrast to the popular or
common perceptions regarding the group behaviour.
So, what is this popular perception or common
perception regarding this group behavior?
It is interesting to see that when economic
objectives are involved, groups of individual
with common interest, usually come forward
to attend this common interest.
That means, they are self-organized, they
automatically come forward if they do have
common interests and they will form a group
to attend the common group objective itself.
We can find so many major examples, like labour
unions.
So, in case of labour unions, whosoever are
the members of the labour unions, they try
to safeguard the interest of each of the members.
If the members, or if the persons do have
common objective, and the question is how
to safeguard the labour related issues, they
may come to labour unions in order to safeguard
the same.
So, that is why it is the common perception
that people who are having common interess,
they automatically come forward, form a group
to satisfy the common interest itself.
So, here is the picture of this group behavior,
that, if there is some shared interest, some
common interest, then people come together
and form a group.
However, Olson finds that this perception
is not generally the case.
For the first time, he argued that this may
be the opposite to the conventional or established
kind of group behaviour that we are right
now having, that people having common interest
automatically come together to form a group
for achieving a shared interest or a common
goal and it is out of the self instinct or
self organizations.
So, this is the common established conventional
belief on the group behaviour, but Olson has
argued that this is not true.
If you are going through the first page of
the introductory part of the book, then we
can find the example of labour union theories.
It is often taken for granted that, at least
when economic objectives are involved, that
groups of individuals with common interest
usually attempt to further these common interests.
The author refuses this conventional perception
and it is very exceptional that individuals
in a group disregard their personal welfare
altruistically.
So, here it is just to highlight that individuals
in the group act out of the self interest.
It is the assumption behind this view.
But however, this may not always work, individuals
may not be motivated by the selfless activities
or be altruistic altogether.
So, if the individuals in a group altruistically
disregarded their personal welfare, i.e.,
maximizing their own self-interest, it would
not be very likely that collectively they
would seek some selfish, and or selfish common
or group objectives.
In this case he draws the conclusion that
such kind of altruism that thinking for others,
thinking from the group objectives to be satisfied
is considered to be highly exceptional.
And self interested behaviour is usually the
rule that we are actually experiencing.
And if at all, they tend to act in support
of group interest that is how to achieve the
group interest itself.
Based on this logic, that individuals are
following the rationality or they are actually
guided by the rational and self-interested
behavior.
Olson’s answer to this conventional belief
has been narrated in this book.
But it is not in fact, that, the idea that
groups will act in the self interest follows
logically from the premise of rational and
self interested behavior.
And here we can take into account these rational
and self-interested individuals will not act
voluntarily to achieve the common or group
interest.
So, group behavior, and individual behaviour
will be different based on this logic that
may be in case of individual behavior and
fulfilling their own interest they will be
following this rationality and self interest
motive.
However, in the group they will not display
the same motive.
So, what is the reason behind that?
Why they will not actually pursue the same
rationality and self-interest in the group
objectives as well.
So, he proved that it does not follow because
of this logic that all of the individuals
in a group would gain if they achieve the
group objectives.
That means, if the group objectives are achieved,
so obviously the benefits will be shared.
If the benefits will be shared, if I am not
the party even to contribute for the achievement
of the group objective, then also I can get
the benefit out of it.
So, what is the need- why I will be contributing
my force for fulfilling the group interest.
By using the same time and resources, I can
actually fulfill my other self interest or
other vested interests.
The exception is that this may work (that
means, the individuals may also be guided
by the self-rationality in order to fulfill
this group interest) if the number of individuals
in the group is quite small, or there is a
kind of coercion a force, or a monitoring
a system or some special device is there which
can guide the individuals or there is some
system which actually motivate to provide
some kind of incentive to the individuals
to act for fulfilling the group interest.
Then only this kind of rationality which are
meant for the individual interest that they
can also equally be applicable in achieving
the group interest as well, otherwise it will
not.
So, in this condition we are just highlighting
that what are those conditions which you must
take into account in order to see that how
the individuals can also use their principle
of rationality for attending the group behaviour?
That is the number of individuals in a group
need to be very small.
And there should be some kind of coercions,
or some other special devices are there which
can motivate these individuals for achieving
the common interest; and rational, and self
interested individuals otherwise they will
not act to achieve their common interest.
So, these are the three conditions if fulfilled
then only the particular individual might
think about fulfilling the interest of the
group as well.
So, these three conditions are: the group
should be small (in this case the individuals
may think to fulfill the interest of the or
the group itself); or there is a provision
of a kind of coercion (Some system should
be there which would be very forceful do it
otherwise you will be penalized); or a some
kind of a governance/surveillance is there
which actually looking the kind of efforts
you are making then only or you can say that
there is some kind of another device.
So, may be in terms of a good co-ordinations,
or the mechanisms that we are actually following.
So, in this case only the individuals they
will act for fulfilling the group interest.
Otherwise they will not be interested in fulfilling
the group objectives.
Why this is happening?
Why their behaviour is so different in these
two context?
The first one is your personal interest, personal
cause and the second one is your group interest,
your group objectives.
Why do the same individual behave so differently?
It is because of the free rider problem /the
tendency of the free rider problem.
The larger the group the less, the smaller
would be for achieving common interest.
So, which he terms that it is a case of free
rider problem.
The individuals are motivated not to make
any effort for achieving the common objectives,
or group objectives.
They always think that we can get the same
collective good free of cost.
Why are we going to make our contributions
or effort in full fulfilling the group objectives?
If at all the group objectives are achieved
then; obviously, the equal share can be provided
to the individual as well.
So, in this context he wrote that the amounts
of the collective good that a member of the
group receives free from the members will
further reduce his incentive to provide more
of that good at his own expense.
And this situation is known as the free rider
problem or this situation gives rise to the
free rider problem.
So, if this is the situation, no individual
will be getting incentive to provide something
for the achievement of the collective goods.
And Olson argues that this problem of free
rider is the very central problem not only
in the public policy or societal issues, but
in political science, economic theory, politics,
and political economy also.
So, the application of free rider problem
and understanding of the group behaviour is
of utmost importance even in the today’s
world.
We can explore further in understanding once
we understand the very core of the theory
itself.
So, now let us discuss what is the main argument
of this theory?
The first one is that the larger the group
the further it will fall short of providing
an optimal amount of collective good, because
of the free rider problem.
What is the meaning of this?
Here, we are just comparing the size of the
group, and the possibility of achieving the
collective good.
So, if the size of the group is large; that
means, many members are existing, as a result
the possibility for providing the optimum
amount of the collective good will be low.
Again what is the reason?
We have already discussed that- Everyone will
be thinking that, if at all the public good
or the collective good is provided then; obviously,
they will be getting their share free of cost.
They do not have to contribute anything they
will automatically get the share.
Because it is collective good and the benefits
are shared.
Because of this reason, the larger the group
then we will be finding that the possibility
of providing this optimal amount of collective
good will be low.
However, in case of the other groups, where
group members are few in numbers, they are
called a small groups and they can easily
fulfill the provision of collective goods.
And it is interesting find to that in small
groups with common interest, there is a surprising
tendency for the exploitation of the great
by the small itself.
So, what is the meaning of exploitation of
the great by the small?
Is it possible?
Here 
members are very few and the frequency of
interaction is very often.
So, in this context, the exploitation of the
great by the small means small groups tend
to devote too few resources to the satisfactions
of the common interest and fulfilling or in
providing the collective good.
And it is surprising to see the tendency for
the lesser members of the small group, they
will exploit the greater members by making
them bear a disproportionate share of the
burden of any group action.
So, here we just want to say that the lesser
member pays actually less for the provision
of the common interest, i.e., collective actions.
And if at all the collective goods are to
be provided, then the burden will be more
on the large sections or large members.
So, that is why, large members or the greater
members are paying the majority of the burden
for the collective goods.
They actually bear a disproportionate portion
of the burden of the collective actions in
comparison to the smaller members.
So, in this context, it is interesting to
analyze and find the correlations, or the
kind of relations that is existing between
the group size and the organizational behaviour
or group behaviour.
So, here we are discussing between two groups
one is your small groups and the second one
is large groups.
And how the members would be behaving in these
two contexts?
Let us take first case, that in case of large
groups, members are getting proportionately
smaller benefit from a collective good.
Because they have to pay more, but whatever
the benefit they are getting out of this provision
of the collective good, the share is so small,
because it is shared among all the individuals
or members.
Here the members are too large.
So, as a result, a single member will be getting
a proportionately very small benefit out of
this collective good.
And this is because the individual will be
contributing very less because of a smaller
return.
In case of large groups, the individuals do
understand that for whatever provision of
collective good, they need to pay more, but
the benefit out of this collective good will
be less.
Therefore, the individual member will try
to contribute less, anticipating a smaller
return out of it.
And the second reason is that why their behaviour
is so?
A single member in a large group is likely
to act for all unless individual return is
more than its cost of action.
So, in that case if the individual member
is not finding enough benefit and if he is
perceiving that his cost is more than the
benefit he is anticipating, then he will not
actually participate.
And therefore because of this two reasons,
there is a need for coercion.
It can enforce how to provide the collective
goods among the members.
So, this is the story of collective good provision
for the large group.
The large groups fail to provide themselves
with any collective good at all whereas, in
contrast, in case of the small groups, there
is a tendency towards a suboptimal provision
of collective goods.
So, how would the provision of the collective
goods be different in these two groups so
far size is concerned?
In case of the large groups, there is always
less tendency to provide collective goods.
But in case of small groups, there is a tendency
for achieving a suboptimal provision of collective
goods.
So, far the very provision of collective goods
is concerned, in case of large groups, the
tendency is not enough that is why tendency
is failing to provide the groups with the
collective good; whereas, in case of small
goods there would be some tendency for providing
the collective goods, but this amount of provision
of the collective goods is less than the optimal
that is a case of the suboptimal provision
of collective goods.
So, suboptimal provision of collective goods
may be provided in the small groups.
Therefore, he argued that the larger the group,
the farther it will fall short of providing
an optimal number of collective goods.
So, because of this logic he has drawn this
conclusion that when the size of the group
increases, then the optimal amount of provision
of collective good decreases.
But in case of small group each member will
be getting proportionately more benefit out
of this collective good provision in comparison
to the cost.
So, the collective good provided by the voluntary,
rational, and unilateral action of one or
two members who find that their reward for
providing the good is enough in comparison
to the cost they pay, they will be coming
forward for providing the public collective
good, and 
that is why the collective provision will
happen.
But, the minority members will be thinking
that that whatever they are incurring the
cost for provisioning of this collective good
is less than the benefit they will be receiving
for it.
And since others pay the cost and some members
of the of the small groups see no incentive
to provide the good.
As a result, it will lead to the end of exploitation
by the small; that means the burden is actually
shared by others.
So, it is a case where we can end the exploitation
by the smaller size.
So, another logic he propounded in this context
of group size and group behaviour is based
on the very size of the group.
So far the small group size is concerned,
there are two types of non market groups,
the first one is the privilege groups and
the second one is the intermediate groups.
So, what exactly is the privileged group or
what is the situation where you can say the
privilege group conditions has arrived and
where the conditions for the intermediate
groups has arrived.
Let us understand the case of the privileged
groups.
Privilege group 
is a group such that each of its members or
at least some of them have an incentive to
see that the collective good is provided.
So, it is because some of the members do have
incentive in providing the collective goods,
even if the particular individual has to bear
the full burden of providing it.
This is because the provision of the collective
good will happen and the reason is that it
is because there is an incentive by a particular
member or group of members.
And again the provision of the collective
good can also be obtained without any group
organization or group coordination.
Because the incentive is very strong, the
incentive is so strong in case of this privilege
group that the provision of collective goods
will happen whether or not the individual
has to bear all the burden of providing the
collective good.
The second type of group which is also a subset
of the small group is the intermediate group.
So, in case of intermediate group, no single
member gets a share of benefit sufficient
enough to give him, or give her an incentive
to provide the good himself or herself.
So, here in comparison to the first one, we
are lacking incentives.
Why are we, in case of intermediate goods,
lacking incentives?
It is because the share of benefits is not
sufficient when the collective goods is provided.
The benefit a particular individual is getting,
is not sufficient to induce him or her to
provide the collective good.
And because the size of the group is small
and that is why the members do not have many
members to notice that what the other members
are doing- whether any other member is helping
or attempting to provide the collective good
or not.
So, in such a group, in these conditions,
the collective goods may, or equally may not
be obtained.
No collective good would ever be obtained
without some group coordination or group organizations.
So, in the first case, in this group, we are
saying that, because of the lack of incentives,
the particular individual in this group will
not be getting enough motivation to provide
the collective good.
And the second is that if at all the collective
good is to be provided, then it can be provided
with the help of group coordination, or group
organizations; otherwise it is not possible.
And the main reason behind this is that the
lack of incentives because the benefits or
the proportion of the benefit is not sufficient
enough to induce the individual members for
providing the collective good.
So, these are the two subsets of the small
group and their characteristics that whether
they will be providing the collective good
or not and in which conditions they would
be thinking to provide collective good.
And the second group is the latent group which
is also known large group.
So, in case of the large group the members
do not have incentive to act to obtain the
collective good.
The reason behind it is whatever the benefit
that will be obtained by the provision of
the collective good will be shared by all
the members in the group.
Therefore, this process does not actually
offer any single individual member enough
incentive 
to pay for the organizations.
Only a separate, or a special kind of incentives
if it can be stimulated to this rational individual
in this latent group, then they may act the
way group is demanding or what they can actually
make an effort for fulfilling the group objectives.
Firstly, in case of this large group or latent
group it is unlikely to have the provision
of collective good, because of no incentive
for obtaining the collective good itself.
And second is that collective goods can be
provided given the condition, that a separate
and a selective incentive will be provided
that can stimulate the rational individual
members to act towards achieving the group
oriented objectives.
And in this situation, the group action can
be obtained only through an incentive that
operates like collective good, and this is
the only reason that how collective goods
can be provided to this large groups.
Moreover, Olson argued that incentive must
be selected because you can find a large set
of incentives.
But we need to be selective, for this latent
group, which kind of incentives may be provided,
so that the individuals can join hands for
the for achieving the group interest.
There is a necessity to separate these two
sections that who do not join the organization
working for group interest and the groups
which work towards the attainment of the group
objectives.
If you are drawing a difference and making
treating them differently then there would
be some kind of incentives that can be generated
in this way.
So, again he highlighted that creating incentives
inside the members is really a task.
And that is why, we need to be very selective
in making the strategies that how this individual
member can get enough incentives for fulfilling
the group objective.
Under this latent group, there is subset group
which is known as mobilized latent groups.
So, what is mobilized latent groups?
So, as we have already understood that in
case of latent groups, there is less chance
that the member should get the collective
good.
But in case of this mobilized latent group,
the collective goods can be provided because
of these two factors the first one is the
presence of a kind of coercions of the individuals
in the group and the second one is the provision
of incentives maybe in terms of positive rewards
to those individuals who are working towards
fulfillment of the collective goods in the
group.
And if it is so then these individuals are
called as the mobilized latent groups, they
work towards fulfilling the group objectives
in obtaining these collective goods.
Because of these two factors that is the coercions
that are existing for the individuals and
the second one is incentives in terms of positive
viewers, the individuals they will be motivated
to work towards achieving the collective goods
and they are known as the mobilized latent
group.
So, now let us discuss about the kind of difference
that we are finding.
Sometimes the small groups or privileged groups
as well as the intermediate groups may lead
to economic and social incentives which lead
their members to obtain the collective goods.
And it is not necessary that we will be getting
the economic incentives always.
Sometimes the social incentives can also play
roles in and providing the collective goods
as well.
Whereas, the larger latent groups will lead
to no incentive and no social pressure and
will not lead their members to obtain a collective
good.
So, this is the distinction that the very
factor incentives, or creating incentives
which can create situations for providing
or not providing the collective goods to the
small groups as well as the latent groups.
And in case of this large group or latent
groups as we understand that there is lacking
a case of incentives.
And that is why economic and social pressure
is almost nil and that is why the collective
goods are not provided to them.
So, there is a need for the kind of institutions
to be created.
The institutions will be forcing or providing
some mechanisms in terms of coercions, or
in terms of inducements, or creating incentives.
So, that the members in the large and latent
groups can work towards for the achievement
of the collective good.
So, the ongoing discussion that size is one
of the determining factors in deciding whether
or not it is possible that the rational pursuit
of the individual interest will bring forth
the group oriented behaviour.
So, if the size is small then the individuals
will be going towards fulfilling the group
oriented behaviours.
And if the size is large or latent you are
saying then the likely effect for getting
or the chance of getting this these group
oriented behaviour is less.
So far the two groups are concerned, the small
groups are not only quantitatively, but also
quantitatively different from the large groups.
And that is why you can say in the small groups,
it is easier to find and provide the collective
goods, but in large groups it is very difficult.
And so far, the effectiveness is concerned,
we will be preferring the small groups because
it is easier to find the collective goods.
So, in this context, Olson narrated the situation
that why we will be preferring a small group,
or why the effectiveness of small group will
be high in providing a collective good.
When the number of participants is large,
the typical participant will know that his
own efforts will probably not make much difference.
So, if one individual’s or one individual
members’ effort is not making any difference
in terms of outcome, then, obviously, there
would be less inducement and he knows that
the individual will be affected by decision
that are actually binding for all.
So, in this case, this situation is providing
less incentives to work further in achieving
the group objectives.
And that is why the action taking groups if
we are finding empirically, the action taking
groups or this sub groups tended to be more
much smaller than the non action taking groups
or subgroups.
So, why we are saying that action taking groups
are sub groups, are tended to be much smaller
than the non-action taking groups and subgroups.
Because we can take the case of a committee,
the committee should be small.
If we are expecting action, like committee
for fixing the minimum price, or the committee
for fixing the minimum support price for the
croups.
So, the size of the committee is small.
Because we want or we are looking forward,
the points of suggestions, their views and
reactions on a particular matter that is why
it is it is said that if we want to know the
action, then action taking groups or subgroups
should be very small in comparison to the
non action taking groups or subgroups.
So, this is the example that if we need some
actions to be taken, the size should be small
and that is why in this context, he argues
the effectiveness of the small size, and the
group size should to be small.
And so far, the social incentives and rational
behaviour is concerned, as he argued.
against the established group behaviour that
rational individual will be motivated by their
rationality.
And that is why they will be trying to achieve
the single individual objectives whereas,
they will not follow the same rational behaviour
in achieving the group objectives when they
become the member of that group.
The economic incentives are not the only incentives.
The social incentives in terms of creation
of prestige, possessing a special kind of
respect in the society, also are helpful in
creating incentives.That can also be taken
into account in entreating the groups, so
that the collective actions can also be provided.
So, in this discussion, we need to understand
what are the determinants of performing a
successful group actions.
What would be the factors which can lead to
successful group actions?
The first thing in our discussion, we are
finding that, it is the size of the group
may lead to a successful group action that
is what he argued.
And the second one is creating right kind
of incentives or the mechanism of selective
incentives.
The incentives if they are right or selective,
then they can motivate the individual members
to act towards achieving the group objectives.
So, in this context after understanding the
whole of this core logic or argument of Olson’s
theory on the group behavior, and collective
action, we need to see that this piece of
work was argued in 1965, and we have already
crossed 50 years.
In this context taking to social situations
into account, what is 
the effectiveness of this theory in today’s
world that we need to ponder over, we need
to go through the current collective action
issues that we are finding in so many cases
of pollution problems, in managing the issues
like environmental problems.
Then we can think about whether the very theory
is still applicable in solving the current
collective action problems, that we are facing.
Thank you very much.
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