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Competitive Altruism and Endogenous Reference Group Selection in Private Provision of Environmental Public Goods

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  • Heinz Welsch

    ()
    (University of Oldenburg, Department of Economics)

  • Jan Kühling

    ()
    (University of Oldenburg, Department of Economics)

Abstract

We develop and test a model of social comparison in which individuals gain status through pro-social behavior (competitive altruism) and in which they endogenously choose the reference group and associated reference standard involved in signaling status (reference group selection). In our framework of private provision of environmental public goods, the optimal reference standard involves a balance between the magnitude of the status signal (implying a low reference standard) and the higher value of the signal in a greener social environment. By using a unique set of survey data we find evidence of (a) respondents behaving in a competitively altruistic fashion and (b) reference persons’ intensity of pro-environmental behavior depending on relevant attitudes of the respondents, consistent with predictions from our framework of reference group selection.

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File URL: http://www.vwl.uni-oldenburg.de/download/V-350-12.pdf
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Bibliographic Info

Paper provided by University of Oldenburg, Department of Economics in its series Working Papers with number V-350-12.

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Length: 32 pages
Date of creation: Oct 2012
Date of revision: Oct 2012
Publication status: Published in Oldenburg Working Papers V-350-12
Handle: RePEc:old:dpaper:350

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Keywords: competitive altruism; reference groups; endogenous reference standard; pro-environmental behavior; private public good provision;

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  1. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, Octomber.
  2. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  3. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
  4. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  5. Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," CEPR Discussion Papers 4459, C.E.P.R. Discussion Papers.
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