Tyranny of small decisions

Twin Glens abutment

Jones River marshland near mouth

Tyranny of small decisions is an economic theory that explains how a series of small, individual choices can result in outcomes that are not optimal for or desired by the collective. This concept is particularly relevant in the context of environmental degradation, market failure, and public policy, where the cumulative effect of individual actions can lead to negative outcomes that no one intended or wanted. The term was popularized by the American economist Alfred E. Kahn in an article about the transportation industry's shift from rail to air and trucking.

Overview

The tyranny of small decisions refers to a situation where a series of small, seemingly inconsequential decisions made independently by individuals can lead to an outcome that is not optimal or desired. These decisions are often made without a full understanding of the long-term consequences or without considering the collective impact of these choices. This concept is a form of market failure where the individual incentives for certain choices lead to poor outcomes for the group as a whole.

Examples

One classic example of the tyranny of small decisions is the Tragedy of the Commons, where individual herders make the rational decision to increase their number of grazing livestock on a common field. While each additional animal benefits its owner, the cumulative effect of all herders doing this depletes or destroys the common resource, to the detriment of all. Similarly, individual decisions to drive a car instead of using public transportation can lead to increased air pollution and traffic congestion, even though the collective preference might be for cleaner air and less traffic.

Implications for Public Policy

The tyranny of small decisions has significant implications for public policy and environmental policy. It suggests that without intervention, individual choices can lead to outcomes that are not in the public interest. This has led to the development of policies aimed at correcting these market failures, such as taxes on pollution, regulations limiting resource use, and incentives for sustainable practices. It also highlights the importance of considering the long-term and collective impacts of decisions, rather than focusing solely on immediate, individual benefits.

Criticism and Challenges

Critics of the concept argue that it overemphasizes the negative outcomes of individual choices and underestimates the ability of markets and democratic processes to correct suboptimal outcomes. They also point out the challenges in determining what constitutes an "optimal" outcome, as values and preferences can vary widely among individuals and over time.

See Also

• Market failure
• Environmental degradation
• Public policy
• Tragedy of the Commons