What Leads to Administrative Bloat? A Dynamic Model of Administrative Cost and Waste

arXiv:2412.15378v3 Announce Type: replace Abstract: The functioning of complex systems depends on the coordination of diverse components, often supported by regulatory structures that incur costs. In human organizations, such costs manifest as administrative burden, which has been rising despite often reducing efficiency. Classic explanations point to bureaucrat self-interest or regulation, yet they do not explain variation across organizations or clarify how this burden can be reduced. Here, we develop a dynamical model of administrative growth that integrates known behavioral mechanisms of process creation, obsolescence, and removal. The model conceptualizes processes as developed for problem solving, but becoming obsolete as conditions change, while continuing to consume resources until actively pruned. This interplay generates two long-term outcomes: stable equilibrium or run-away growth. The threshold separating these outcomes is shaped by organizations' propensity to create new processes when faced with problems, and their propensity to prune obsolete ones in response to administrative burden. Importantly, their effects are asymmetric: sufficiently high creation propensity leads to bloat regardless of pruning propensity. Faster environmental change shifts this threshold, making bloat more likely. Simulations of interventions show that lasting reductions in administrative costs and waste require permanent shifts in priorities and investments in distinguishing obsolete from useful processes. Temporary efforts or indiscriminate cuts provide only short-lived relief, and counterintuitively, prioritizing direct production can increase waste. Our work highlights a general mechanism by which well-intentioned problem-solving can create self-reinforcing inefficiencies in complex systems, offering insights possibly generalizable to broader applications, such as legal, policy, and software systems where obsolete elements accumulate.