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Do people invest in local public goods with long-term benefits? Experimental evidence from a shanty town in peru

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  • Thomas de Hoop
  • Ricardo Fort
  • Luuk van Kempen

Abstract

This 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.

Suggested Citation

  • Thomas de Hoop & Ricardo Fort & Luuk van Kempen, 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.
  • Handle: RePEc:feb:artefa:00070
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    References listed on IDEAS

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    Cited by:

    1. Alpízar, F. & Gsottbauer, E., 2015. "Reputation and household recycling practices: Field experiments in Costa Rica," Ecological Economics, Elsevier, vol. 120(C), pages 366-375.
    2. Alpízar, Francisco & Gsottbauer, Elisabeth, 2013. "Reputation and Household Recycling Practices: Field Experiments in Costa Rica Abstract: Pro-environmental behavior is the willingness to cooperate and contribute to environmental public goods. A good ," Discussion Papers dp-13-13-efd, Resources For the Future.

    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • I1 - Health, Education, and Welfare - - Health

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