Editor's note: Many economic regulators, influenced by the work of Mancur Olson, maintain the notion that consumers hold little sway over big-industry concerns. They argue that diffuse interests of the "little guys" lack the strength and organization necessary to influence public policy. HBS Professor Gunnar Trumbull disagrees. In his new book, Strength in Numbers: The Political Power of Weak Interests, Trumbull shows how groups such as consumers can effect change by forming interest-driven alliances among activists, regulators, and corporations. "The core challenge in shaping new regulatory policy is the need to make that policy appear legitimate," he writes.
In this excerpt from Chapter one, Trumbull discusses how collective interests can lead to a rapid collective response.
Read an interview with the author.
The Surprise Of Coordination
From Strength in Numbers: The Political Power of Weak Interests
Empirical studies have consistently shown a capacity to coordinate when the collective interest is both material and evident. One of the early studies to assess the impact of group size on coordination to achieve pragmatic goals was conducted by sociologists Gerald Marwell and Ruth Ames. In their 1979 study, groups of high school students were given funds to invest. Participants could opt to invest individually, at a relatively low rate of return, or to add some or all of their funds to a group pool, which would give a higher return. Regardless of how individuals invested, the returns to the group pool were then divided among all members of the group. Given the theorized impact of group size on cooperation, the authors expected larger groups to have fewer students contributing their funds to the group investing pool. Instead, they found no significant difference across group sizes. Coordination was by no means complete. But a surprisingly high percentage of students, 87 percent on average, contributed at least some of their funds to the collective pool. Of those, 22 percent contributed only to the common pool. Just 13 percent invested only privately. "There can be little doubt," concluded Marwell and Ames, "that subjects in our experiment do not fit Olson's description of rational free riders in this isolated, abstract, but financially real situation." Their criticism is perhaps too sharp. After all, coordination was not complete among these groups, and potential financial gains were lost due to a lack of sufficient coordination. The point is not that coordination is easy, or automatic. But when the group interest is material and evident, a fairly high level of coordination can nonetheless be achieved.
A real-world, and widely studied, example of this phenomenon is listener-supported public radio. It is costly for public radio stations to coordinate their viewers so that they all contribute at a sufficient level, and stations put considerable effort into raising funds. With a reasonably affordable amount of effort, however, and with matching funds from nonprofit organizations and the government, they are able to prod the listening public into contributing sufficient funds to sustain the public good.
“The point is not that coordination is easy, or automatic. But when the group interest is material and evident, a fairly high level of coordination can nonetheless be achieved.”
A fascinating set of cases that clearly reflects the properties of diffuse pragmatic interest representation involves specific disease populations. Individuals that either are suffering from an uncured disease, or are in a particularly susceptible population, have material and evident interest in finding a cure. They also clearly face strategic reasons for letting someone else take on the task. What is important about these medical examples is that the collective interest is unambiguous. We know without question that AIDS patients have an interest in finding a cure for the disease, even if they choose not to participate in AIDS patient groups or contribute to funding AIDS research. Yet the U.S. mobilization around AIDS was highly successful. Nor is this a recent phenomenon. A classic disease-centered coordination success story was the effort of the nonprofit March of Dimes in the 1920s to raise funding for polio research. The organization's strategies to induce contributions relied heavily on social pressure. Popular culture icons such as Humphrey Bogart and Mickey Mouse appeared in March of Dimes advertisements. Although criticized as manipulative or exploitative, March of Dimes posters featuring cute children that were also clearly afflicted with polio (the original poster children) were effective. A strategy of "porch light" fundraising campaigns applied powerful social pressure to encourage contributions. At exactly 7 p.m. on a specific night, households wishing to contribute to the March of Dimes were asked to put on their porch lights so that volunteers would know whom to visit—and also so that neighbors could see who was giving and who was not. The lesson of the March of Dimes success story is not that defending diffuse pragmatic interests is necessarily easy, but that it is possible. And when collective interests are both material and evident, they tend to evoke a rapid and effective collective response.
One of the most striking apparent counterexamples is in the area of environmental protection, and in particular climate change. Responses to climate change pit energy providers and manufacturers—for whom the costs of adjustment are likely to be high—against the general public interest in restraining temperature increases. In this contest, the concentrated interests appear to win. But a survey of responses across countries shows that these responses mirror popular sentiment about climate change. For countries whose populations had come to see global warming as a pragmatic collective threat, efforts to promote the reduction of CO2 emissions followed quickly. If we compare levels of reported concern about climate change in different countries with national commitments to reduce CO2 output under the Kyoto Protocol, the correlation is evident (see Figure 1.2). In general, countries whose population perceived climate change as an important environmental issue also committed to significant CO2 emissions reductions.
Of course, one might object that none of these countries committed to reducing CO2 emissions sufficient to stem global warming. That is, in part, because global warming poses a coordination problem not only at the national level but also at the global level, and at the global level coordination remains a problem. We are only just beginning to develop the kinds of institutions that might promote the representation of global diffuse interests.
What we do not detect, however, is any sign of a coordination problem within national policymaking. Narrow industry interests have generally not thwarted diffuse public interests in reducing emissions. Rather, it is differences in the broad public perception of need that explain most of the variance in emissions reduction we observe across countries.
The point of these examples is not that diff use interests will always find an adequate policy response, nor that coordination is at all easy. The fact of frequent, effective diffuse interest representation suggests that we must look more closely at the incentives and tools by which advocates overcome the very real obstacles to a coordinated response. We should also focus more critical attention on those cases in which diffuse pragmatic interests go unrepresented in public policy. For too long we have accepted an easy account of these failures based on the diffuseness of the underlying interest. The relative ease with which diffuse interests appear to find representation in public policy suggests that the reasons behind these exceptions may be more complicated and more interesting than we had previously assumed.