1 / 23

On the crowding effect of public policies

On the crowding effect of public policies. Clara Villegas-Palacio University of Gothenburg Camp resource XVII NC State University June, 2010. Presentation Outline. Introduction – crowding motivation theory Crowding effect of non-monetary interventions on voluntary contributions to PG

ewa
Download Presentation

On the crowding effect of public policies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. On the crowding effect of public policies Clara Villegas-Palacio University of Gothenburg Camp resource XVII NC State University June, 2010

  2. Presentation Outline • Introduction – crowding motivation theory • Crowding effect of non-monetary interventions on voluntary contributions to PG • Does disclosure crowd-out cooperation? • (Joint work with Peter Martinsson) • Introduction • Experimental Design • Main Results • Crowding effect of monetary interventions on VC to PG • Short run and long run crowding effects of subsidies on voluntary contributions Public goods • (To be done with Jorge Bonilla and Peter Martinsson) • Experimental design

  3. Introduction • Extensive evidence in the literature of voluntary contributions to public goods (PG) • Individual behavior in PG situations is not driven by economic motives alone • Different motivations (Nyborg and Rege 2003) • Altruism (Hammond 1987; Andreoni 1990) • Social norms (Holländer 1990, Rege 2000) • Fairness (Fehr and Schmidt 1999)

  4. Introduction • These motivations may interact with an introduced intervention (policy) leading to crowding in/out of contributions– Consequences for the provision of PG • Monetary interventions • Nyborg and Rege (2000) analyze possible crowding effects of subsidization of private contributions • Non monetary interventions • Cardenas and Stranlund (2000): effect of rules and regulations imposed from outside the community on local environmental quality

  5. Non-monetary intervention Does disclosure crowd out cooperation? Peter Martinsson, Clara Villegas

  6. Introduction • Previous literature (Bénabou and Tirole 2006; Ariely et al.2009) discuss three broad motivations for individuals to behave pro-socially: • Intrinsic motivation - altruism • Extrinsic motivation – monetary reward • Image motivation – social approval • Bénabou and Tirole (2006) suggest possible crowding effects of disclosure: • “Altering any of the three components of motivation, for instance through the use of extrinsic incentives or a greater publicity given to action, changes the meaning attached to pro-social behavior”

  7. Introduction - Hypotheses • Investigate crowding effects of disclosure on voluntary contributions to a PG using an experimental approach • Why do we expect an interaction between disclosure and motivations for voluntary cooperation? Image motivations External interventions Intrinsic motivation Disclosure (non monetary intervention) (+): Perceived as supportive (-): Perceived as controlling (-) “Good actions become suspected of being motivated by appearances” (+) or (-) by social norms Total effect = f (crowding effect on intrinsic motivation + crowding effect on image motivation)

  8. Introduction - Literature • Mixed evidence in previous experimental literature: • Rege and Telle (2004): Disclosure crowds- in contributions • Noussair and Tucker (2007): No significant difference between standard and disclosure treatment • Lab experiment – (Linear) Public Goods game – our standard treatment • Experiments are run with students as participants • People are randomly allocated in groups of 4 participants • Each subject receives an endowment of 20 tokens • Subject decides on contribution to the Public good • For each token contributed to the public good each subject in the group receives 0.4 tokens • All decisions are anonymous

  9. Experimental design • One-shot (no strategic behavior), linear public good game conducted with students in Colombia. • Two sessions per treatment. 24 participants in each session • Randomly allocated to groups of 4 members

  10. Some results • Mean unconditional contribution

  11. T1. No disclosure T2. Out-group disclosure .3 .2 .1 0 T3. In-group disclosure T4. Joint in-group and out-group disclosure .3 .2 .1 0 0 5 10 15 20 0 5 10 15 20 Unconditional contribution Some results • We find that when implementing joint in-group and out-group disclosure: • The proportion of subjects contributing the whole endowment significantly increases compared to in the anonymity treatment • The proportion of non-contributions does not change significantly.

  12. Discussion and conclusions • Significantly higher variance in unconditional contributions under joint disclosure: unconditional contribution may be moved in various ways • Effect of the context of the game in our results. • Groups in our study studies lack any history of interaction which may be crucial for pro-social behaviour • No incentives for reputation building • Reciprocity is not present • Exogenous vs. Endogenous choice of institutions

  13. Monetary intervention • Crowding effects of subsidies to voluntary contributions to public goods. • An experimental test

  14. Introduction • Are there long-run crowding effects of PES schemes on voluntary conservation? (Field experiment with farmers in Colombia) • More general question to be studied first: How do subsidies affect voluntary cooperation in a PG? • Do we observe a short-run crowding-in/out effect on voluntary contributions? • What would happen if the policy is reversed? (Long run crowding effect) • Gächter et al (2009): one-shot and repeated gift-exchange experiments

  15. Which hypothesis can be drawn from existing theory? • Economics literature- Nyborg and Rege (2003) • Short run: no effect / crowding-in effect • Long run: crowding-in effect. • Psycological literature: • Short run: crowding in • Long run: crowding out

  16. Experimental design Q1. Are there short-run and long-run crowding effects when introducing a subsidy to voluntary contributions to Public Goods? First set of experiments: Confounding effects: strategic contributions To avoid strategic motivations: Sequence of one shot PGG with new matching every period.

  17. Experimental design Q1. Are there short-run and long-run crowding effects when introducing a subsidy to voluntary contributions to Public Goods? Short run crowding: Long run crowding:

  18. Experimental design Q2. Are there crowding effects under repeated interaction? Second set of experiments: Same experimental design but with fixed groupsduring the 30 periods. Q3. Does the experience of no-subsidy matter for short and long-run crowding effects? Add one extra-treatment to the first and second set of experiments

  19. Experimental design • To be decided: How should we introduce the subsidy into the game? • To present it as a subsidy comming from a third agent (problematic) • To make the contributions to the PG cheaper • Subjects are taxed in the NS treatment and the tax is removed for the S treatment

  20. Thanks

  21. Which hypothesis can we draw from existing theory? • Nyborg and Rege (2003) discuss some models that can explain voluntary contributions and their implications for crowding effects: • Homo Economicus: • Short run: subsidies have no effect • Pure altruism: • Short run: subsidies have no effect • Impure altruism: • Short run: subsidies crowd-incontributions

  22. Which hypothesis can we draw from existing theory? • Nyborg and Rege (2003): • Social norms models • Holländer,1990: crowding-in in short run • Rege, 2003: crowding-in in both short and long run • Fairness models: crowding-in in short run • Psycological literature: • Short run: crowding in • Long run: crowding out

  23. Introduction - Literature • Mixed evidence in previous literature: • Rege and Telle (2004): Disclosure crowds- in contributions • Noussair and Tucker (2007): No significant difference between standard and disclosure treatment • Disclosure of behavior but not identity • Sell and Wilson (1991): Crowds-in contributions • Croson (2001): multiperiod PGG. No impact on contributions • Field experiment: • Soetevent (2005): Church offers among 30 churches in the Netherlands • Crowds-in donation to causes outside the church

More Related