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To Give or Not to Give: The Price of Contributing and the Provision of Public Goods

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  • Johannes Diederich
  • Timo Goeschl

Abstract

We examine the relationship between the price of giving and the decision to contribute in a framed field experiment (n = 2,440). In a departure from previous research using match rates and rebates, we vary the price of contributing to the public good directly. Treatment groups differ between subjects by the amount of money subjects have to give up in order to provide one unit of the public good. In contrast to earlier results, the theoretical prediction of a clear negative relationship between price and the decision whether to contribute is borne out by the experimental evidence. We estimate the mean elasticity of the probability to contribute as -0.31. The direct price effect is robust across specifications including sociodemographic controls for the highly heterogenous, Internet-representative non-student sample of subjects.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19332.

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Date of creation: Aug 2013
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Handle: RePEc:nbr:nberwo:19332

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