Freedom to Freeride

Abstract

This study examines the balance between freedom, fairness, and efficiency when individuals are presented with the opportunity to act paternalistically. Specifically, we study third-party decisions in public goods, focusing on spectators' behavior in an experimental setting. By analyzing variables including beliefs about others, as well as source of endowment, we aim to understand what drives decisions to intervene. Additionally, we explore how these experimental findings align with spectators’ attitudes toward a real-world scenario—taxing Norwegian citizens to fund public goods. This research contributes to behavioral economics by addressing a gap in the literature, incorporating a third-party intervention mechanism into a public goods game, and bridging theories of public goods and social paternalism.

The study employs an experimental design in which third-party observers are given the opportunity to intervene in a public goods game, enforcing efficiency and equality among players while simultaneously infringing on their autonomy. This setup raises an intriguing question: should individuals have the freedom to freeride, or does morality justify intervening to enforce equality and/or efficiency?

The statistical analysis reveals that a majority of spectators show a moral preference for prioritizing freedom over enforcing equality and/or efficiency. Spectators with conservative right-wing ideologies are slightly less likely to intervene than those without such ideologies, whereas higher education slightly increases the likelihood of intervention compared to those without higher education. The origin of players' endowments (whether earned or windfall) had no significant impact on the intervention decisions of the spectators, nor did their beliefs about the players’ contributions.

Spectators who chose to intervene showed greater support for government taxation of public goods than those who did not intervene. Furthermore, spectators with optimistic beliefs about others’ behaviors were more supportive of public goods taxation compared to those with pessimistic beliefs.