Do people invest in local public goods with long-term benefits: Experimental evidence from a shanty town in Peru
AbstractThis paper discusses voluntary contributions to health education in a shanty town in Peru, using a new experimental setup to identify voluntary contributions to local public goods. The experiment enables individuals to contribute to a health education meeting facilitated by an NGO, which they know will only be organised if the cumulative investment level exceeds a certain threshold value. In contrast to expectations of aid distributors, individuals contributed a substantial amount of money, despite the long-term nature of the health benefits from health education. High discount rates only seem to have had a detrimental effect on investment in a poorer subsample. Results from a complementary experiment, which identifies donations to a nutrition program, suggest that positive beliefs about short-term benefits from health education in the form of learning effects have played an important role in the investment decision. The results indicate that channelling decision-making power about public good provision to beneficiaries not necessarily implies a crowding out of investment in local public goods with long-term benefits. Hence, particular attention is given to the potential role of cash transfers in the financing of local public goods.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24968.
Date of creation: Jul 2010
Date of revision:
Health education; Field Experiment; Public Good; Peru;
Other versions of this item:
- Thomas de Hoop & Luuk van Kempen & Ricardo Fort, 2009. "Do people invest in local public goods with long-term benefits? Experimental evidence from a shanty town in peru," Artefactual Field Experiments 00070, The Field Experiments Website.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- I1 - Health, Education, and Welfare - - Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-CBE-2010-10-30 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-10-30 (Experimental Economics)
- NEP-PBE-2010-10-30 (Public Economics)
- NEP-PUB-2010-10-30 (Public Finance)
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