Diffuse costs and concentrated benefits

consider a hypothetical law that assessed a $1 tax on everyone in the United States with the proceeds to be given to one individual for unrestricted use as he sees fit. The people harmed by such a law—the individual taxpayers—will not be very motivated to spend the time and effort to convince Congress to change the law. They might resent the dollar taken from them for a silly cause they don’t support, but the lost dollar isn’t worth the trouble of doing something about it.

On the other hand, it’s hard to imagine something that would motivate the recipient more than the prospect of receiving an easy $350 million. He would fight hard to keep such a law in place, hiring lobbyists, running public information campaigns about all the wonderful things he would do with the money, and donating to the campaigns of elected officials. In fact, he would probably be willing to spend upwards of $349 million on such an effort.

Often, the benefits of a given policy are concentrated in a relatively small number of people or interests (in my hypothetical, an army of one), yet the costs are spread out (diffuse) to a great many. The impetus for individual action to maintain or change the policy is very real for the beneficiaries, and virtually nonexistent for the payers.