De rationibus est disputandum: Psychological dimensions of choice and public policy design

Taking into account the complex motivations that spurs individuals’ choices contributes to a better understanding of consumer׳s profile. This information, in turn, can be used by policy makers in cost-benefit analysis and influence the institutional decision-making design. In this line, the paper uses econometric results that focus on shedding light on a consumer׳s warm glow motivational profile, where warm glow is defined as the good feeling that economic agents experience when contributing privately to the provision of public goods. In this context, we study relationship between a motivational variable “warm glow” and selected socio-economic characteristics of individual consumers and this way further understand this psychological dimension of choice. The interpretation of our estimates allows to categorize and profile two types of “warm-glowers”: the “ego-driven” and the “social-oriented” ones. A critical discussion on whether embodying (or not) the latent estimated motivational structures (and underlying determination factors), when performing cost-benefit analysis for the provision of environmental goods is central to the interpretation of estimation results and profiling exercise and contributes to the economic debate dating back to Stiegler and Becker (1977).