What is the term for the problem where individuals can benefit from an organization's actions without joining or paying costs?

• A. Free rider problem
• B. Public goods problem
• C. Selective benefits
• D. Collective action problem

Answer: (A)

The main idea here is that people can enjoy the benefits of a group's actions without contributing to the costs. This situation happens when a good or outcome is non-excludable—you can’t easily prevent someone from benefiting—and people expect others to pay for it. Because some individuals can gain without paying, they may choose not to contribute, which can lead to under-provision or underfunding of the desired outcome.

This is the free rider problem, a specific way that collective action can fail. For example, in public-works efforts or defense, you can’t easily exclude non-payers from the benefits, so some individuals might rely on others to cover the costs. In contrast, the public goods problem describes the nature of the good itself (non-excludable and non-rivalrous), while selective benefits are incentives offered to members to encourage joining and reduce free riding. The collective action problem is the broader category of difficulties groups face in organizing and paying for common goals, with free riding being a common manifestation.