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Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision

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  • Gallier, Carlo
  • Goeschl, Timo
  • Kesternich, Martin
  • Lohse, Johannes
  • Reif, Christiane
  • Römer, Daniel

Abstract

Many public goods can be provided at different spatial levels. Evidence from social identity theory and in-group favoritism raises the possibility that when higher-level provision is more efficient, subjects’ narrow concern for local outcomes could undermine efficiency. Building on the experimental paradigm of multi-level public good games and the concept of “neighborhood attachment,” we conduct an artefactual field experiment with over 600 participants in a setting conducive to routine parochial behavior. In an inter-neighborhood intra-region design, subjects allocate an endowment between a personal, a local, and a regional public good account. The between-subjects design crosses two treatment dimensions: One informs subjects that the smaller local group consists of members from their own neighborhood, while the other varies the relative productivity at the two public goods provision levels. We find evidence for parochialism, but contrary to our hypothesis, parochialism does not interfere with efficiency: The average subject responds to a change in relative productivities at the local and regional levels in the same way, whether they are aware of their neighbors’ presence in the small group or not. The results even hold for subjects with above-median neighborhood attachment and subjects primed on neighborhood attachment.

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  • Gallier, Carlo & Goeschl, Timo & Kesternich, Martin & Lohse, Johannes & Reif, Christiane & Römer, Daniel, 2019. "Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 500-517.
  • Handle: RePEc:eee:jeborg:v:164:y:2019:i:c:p:500-517
    DOI: 10.1016/j.jebo.2019.05.028
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    2. Diederich, Johannes & Goeschl, Timo, 2017. "Does Mitigation Begin At Home?," Working Papers 0634, University of Heidelberg, Department of Economics.
    3. Marco Catola & Simone D'Alessandro & Pietro Guarnieri & Veronica Pizziol, 2020. "Multilevel Public Goods Game: an Online Experiment," Discussion Papers 2020/263, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    4. Diederich, Johannes & Goeschl, Timo, 2018. "Voluntary action for climate change mitigation does not exhibit locational preferences," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 175-180.
    5. Yurina Otaki & Hidehito Honda & Kazuhiro Ueda, 2020. "Water demand management: Visualising a public good," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-14, June.

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    More about this item

    Keywords

    Social identity; Parochialism; Multi-level public goods; Artefactual field experiment;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H4 - Public Economics - - Publicly Provided Goods

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