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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 where higher-level provision is more efficient, subjects' narrow concern for local outcomes (parochialism) could harm efficiency. Building on the experimental paradigm of multi-level public good games and the 'neighborhood attachment' concept, we conduct an artefactual field experiment with 600 participants in a setting conducive to parochial behavior. In an inter-neighborhood intra-region design, subjects allocate an endowment between a personal account, a local, and a regional public good account. The between-subjects design varies across two dimensions: One informs subjects that the smaller local group consists of members from their own neighborhood ('neighbors'). 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 level in the same way, whether 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.

Suggested Citation

  • Gallier, Carlo & Goeschl, Timo & Kesternich, Martin & Lohse, Johannes & Reif, Christiane & Römer, Daniel, 2017. "Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision," ZEW Discussion Papers 17-012, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:17012
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    References listed on IDEAS

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    Cited by:

    1. Diederich, Johannes & Goeschl, Timo, 2017. "Does Mitigation Begin At Home?," Working Papers 0634, University of Heidelberg, Department of Economics.

    More about this item

    Keywords

    social identity; parochialism; multi-level public goods; artefactual field experiment;

    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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