More on the Origins of the Free Rider Idea
About a month ago, I posted on "How the Free Rider Idea Evolved," with an emphasis on how the "free rider" terminology was used about financial markets and labor union organizing in the 1940s and 1950s, before the term seeped over into its modern economic usage by way of James Buchanan and Mancur Olsen. For those who enjoy tracking terms of art back to their burrows, here's some follow-up that varies from the pedestrian to the intriguing to the wonderful--but probably not true.
The earliest use of the "free rider" term seems to be straightforward, even boring. The Oxford English dictionary offers this definition:
orig. U.S. Originally: a person who rides a train, bus, etc., without having paid for it (when others have). Now chiefly: a person who, or organization which, benefits (or seeks to benefit) in some way from the effort of others, without making a similar contribution.
The OED offers an example dating back to 1859 about a count of rail passengers, "not including commuters and free riders." Of course, someone who doesn't pay their fare on a mass transit system is a good example even for the modern classroom of a free rider.
Reader Charles Clarke sent me an intriguing example of "free ride" terminology in the economics literature from back in the 1920. Specifically, John Maurice Clark wrote this in his 1926 book, the Social Control of Business (University of Chicago Press, pp. 110-111):
A person who does not have a job or any other source of income, and who does not know where to get one and how to go about canvassing the market effectively, does not possess the substance of liberty. That person is in a position to be exploited and to be forced to make contracts which are essentially made under duress. In addition to this equipment of knowledge, a person needs some reserve funds in order to be able to hold off from the market and see if the second or tenth or twentieth bargain that offers will not be better than the first. When pockets are empty this search may mean real privation. Often one of the chief obstacles to a real canvass of the market consists of the costs of transportation, in which case "liberty and the pursuit of happiness" may require a free ride on the railroad. If this is not forthcoming from public funds, the employer's private interest may be strong enough to furnish it. But when the employer foots the bill, his interest in the case is likely to end when he gets enough labor, without regard to what happens to the laborers after he is through with them. For example, in this country there are various ways of getting harvest hands into the fields without requiring them to pay their railroad fares, but there is no system for getting them back again after the harvest is in.
Beyond a sort of OCD compulsiveness about noting a place where the "free ride" terminology is employed in the economics literature, this reference is conceptually intriguing. In way way, it's just a reiteration of the already-established use of referring to those who ride trains without paying. But in another way, it focuses on the modern issue of addressing search costs for those finding a new job. In my reading, it also offers just a hint that an industry like a railroad with high fixed costs and low marginal costs may sometimes charging more than is socially desirable, in an attempt to cover its fixed costs, when something closer to marginal cost pricing might offer social benefits.
One final source of the "free rider" image may be an example of the "too good to check" phenomenon. In his Intermediate Microeconomics textbook (Scott, Foresman and Company, 1990 edition, p. 572), Heinz Kohler wrote:
This unwillingness of individuals voluntarily to help cover the cost of a pure public good, and their eagerness to let others produce the good so they can enjoy its benefits at a zero cost, is called the free-rider problem. The name has its origin in the Old West, in the days of cattle rustling. The ranchers of Dodge City banded together to form a vigilante group to catch (and hang) cattle theives. Everyone contributed to the cost of the security force on horseback--that is, until rustling had been sufficiently discouraged by the existence of this group. Then individual ranchers began to withdraw, realizing that they could benefit as much if they didn't pay. They became "free-riders" instead. Before long,the security force collapsed, and cattle rustling resumed.
This story has a comforting concreteness, and certainly sounds as if it's referring to a real event. There are of course examples in the western United States of voluntary groups formed to fight cattle rustlers, with more or less success. It's a nice intuitive story of what the broader "free rider problem" means. But at least with a cursory search (the Oxford English Dictionary and some messing around with Google), I've not found any evidence that the actual term "free rider" originated in this context. Maybe some historian of the Old West can pass along a citation?
Posted by Timothy Taylor at 10:00 AM
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