Back to School: PTAs and Olson's "Theory of Groups"

In Olson’s “Theory of Groups and Organizations” chapter he concludes that in order for a group to voluntarily take action and achieve the optimal level of a collective good (T*), the marginal cost of the collective good must be shared in the same proportion as the marginal benefits. If the marginal costs are distributed unevenly, the result will be suboptimal, as some group members will have marginal costs higher than the marginal benefits, and thus will be incentivized not to contribute. 

We can see an example of these group dynamics in parent-teacher associations or PTAs, assuming that the group's collective good (T) is an improved educational experience for their children. The marginal costs and benefits are distributed unevenly, since the marginal costs to some parents of attending PTA meetings or volunteering at school events might be higher than others and the percieved marginal benefit of the PTA's work may vary. Thus the optimal level (T*) will not be achieved.

However, some amount of the collective good will be provided voluntarily, resulting in what Olson calls "the exploitation of the great by the small" as some group members individually value the collective good so highly that they are willing to disproportionately pay the costs. This dynamic is common in smaller groups, such as PTAs (or UVA clubs). Although any parent at the school can join, it is usually only a small but passionate group of parents who become really involved in the organization, as they determine that the benefits of participation are worth the costs of time and effort. Other parents then have an incentive to free-ride or not volunteer because they know that their children will enjoy the benefits regardless.