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

Author

Listed:
  • 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.

Suggested Citation

  • Heinz Welsch & Jan Kühling, 2012. "Competitive Altruism and Endogenous Reference Group Selection in Private Provision of Environmental Public Goods," Working Papers V-350-12, University of Oldenburg, Department of Economics, revised Oct 2012.
  • Handle: RePEc:old:dpaper:350
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    File URL: http://www.vwl.uni-oldenburg.de/download/V-350-12.pdf
    File Function: First version, 2012
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    References listed on IDEAS

    as
    1. 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.
    2. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-116, March.
    3. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    4. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-1028, September.
    5. Armin Falk & Markus Knell, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 417-435, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

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

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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