The free-rider problem is one of the most widely discussed social dilemmas in economic theory. The free-riding hypothesis expects that individuals will under-invest in public goods, but people often behave in ways that are inconsistent with this prediction. Why do we see variation in free-riding behavior? This study seeks to understand when group-level decision-making produces socially sub-optimal outcomes by investigating free-riding in one particular context: military alliances. It argues that individual leaders -- the actors who, in fact, make alliance-related decisions -- are an important source of variation in free-riding. I argue, in particular, that leaders with business experience are more likely than leaders from non-business backgrounds to prioritize material considerations over fairness. Business leaders are socialized to value their company's bottom line above all else. Moreover, leaders who select careers in business may be predisposed to thinking selfishly, as economic models often assume that people do. I test this hypothesis by analyzing defense expenditures in 17 NATO countries from 1953 to 2004, utilizing new data on the backgrounds of leaders. A regression analysis with country and time fixed effects shows that former businesspersons spend less on defense than leaders without business experience. The findings are strongest during the Cold War, when NATO had a single unambiguous goal: deterring the Soviet Union. Business leaders, therefore, are more likely than other types to act as rational utility maximizers, especially when they believe that they can count on the United States to shoulder the defense burden
Matthew Fuhrmann is an associate professor of political science and Ray A. Rothrock `77 Fellow at Texas A&M University.
His research focuses on international relations, nuclear proliferation, and armed conflict. He is the author of Atomic Assistance: How “Atoms for Peace” Programs Cause Nuclear Insecurity (Cornell University Press, 2012) and the coauthor of Nuclear Weapons and Coercive Diplomacy (Cambridge University Press, 2016). His work has been published or is forthcoming in peer reviewed journals such as American Journal of Political Science, British Journal of Political Science, International Organization, International Security, International Studies Quarterly, Journal of Conflict Resolution, Journal of Peace Research, and Journal of Politics. He has also written opinion pieces for The Atlantic (online), The Christian Science Monitor, Slate, and USA Today.
He is a term member of the Council on Foreign Relations. You can follow him on Twitter @mcfuhrmann.