Religion and cooperation in a public goods experiment

We test whether religion affects adult subjects' decisions in a repeated public goods experiment. Contribution levels are not influenced by religious affiliation or participation. However, the decline with repetition is smaller among religious subjects, suggesting that religion may sustain cooperation.     

Demand for different types of public goods: evidence from Nigeria

Preferences of Nigerian households vary across different types of public goods. For example, some prefer roads while others favor education even after controlling for the existing supply of these goods. What explains this variation? We argue that the perceived distributional consequences of specific public goods differ conditional on the personal characteristics of households. In particular, households demand the type of public good that (a) increases the utility of assets they already own and (b) resonates with their past experiences involving the lack of particular public goods. We test our argument with data on 123,000 Nigerian households. We find strong evidence for our argument across six types of public goods.     

Retailing public goods: The economics of corporate social responsibility

This paper explores the feasibility and desirability of Corporate Social Responsibility (CSR). We identify CSR with creation of public goods or curtailment of public bads. Using a model with profit-maximizing firms, the paper shows that there is a direct parallel between CSR and traditional models of private provision of public goods. Indeed, firms that use CSR will produce public goods at exactly the same level as predicted by the standard voluntary contribution equilibrium for public goods. We compare CSR with government provision and charitable provision, discussing when CSR by private for-profit firms could have a comparative advantage in dealing with public goods provision.     

Dictator monopolies and essential goods: experimental evidence

Monopolists set prices and if the good is unessential this may place the consumer in an uncomfortable position. But if the good is essential the consumer faces a pay-to-live or -die choice. Dictator and ultimatum games are superficially similar in that one game offers the right of refusal, while the other does not. The dictator monopoly is, however, not a game, and behaviour could be radically different in the market environment versus game environment. We recast the dictator game as a dictator monopoly experiment and find that the fairness characteristic of the game evaporates quickly as rounds progress.     

Testing static game theory with dynamic experiments: A case study of public goods

Game theory provides predictions of behavior in many one-shot games. On the other hand, most experimenters usually play repeated games with subjects, to provide experience. To avoid subjects rationally employing strategies that are appropriate for the repeated game, experimenters typically employ a “random strangers” design in which subjects are randomly paired with others in the session. There is some chance that subjects will meet in multiple rounds, but it is claimed that this chance is so small that subjects will behave as if they are in a one-shot environment. We present evidence from public goods experiments that this claim is not always true.     

Woodsy the optimal owl: Environmental campaigns, norms, and implications for public goods policy

Norms regarding private provision of a public good (e.g. cutting down on energy use, not littering) can affect the marginal gains from contributing to a public good and therefore people's decisions about contributing to the public good. A model is proposed in which norms of private contributions to a public good can be influenced by public policy, and these norms affect people's self-image, which derives from a comparison of one's own contribution with the norm contribution. In this context, we examine the conditions under which private contributions to a public good are efficient, and the conditions under which policy affecting these norms improves social welfare. We find that (1) a benevolent social planner who fails to account for private provision norms will underprovide the public good, and (2) public policy that attempts to raise the norm contribution of private provision can increase social welfare if the effect of raising the norm does not have an extreme negative effect - either extremely small or extremely large - on peoples' self-image.     

Institutions, motivations and public goods: An experimental test of motivational crowding

Contributions to public goods can be motivated by intrinsic factors such as warm glow altruism and fairness, as well as extrinsic incentives such as sanctions and payments. However, psychological studies suggest that formal extrinsic incentives may crowd out intrinsic motivations. In an experimental study of individual contributions to a public good we find that suasion crowded in voluntary contributions, while an extrinsic incentive in the form of a regulation led to crowding out. This has implications for the design of public policy where ranges of motivations are present.     

Export and import composition as determinants of bilateral trade in goods: evidence from Russia

Conventional theory and several empirical studies state that incomes and exchange rates are the key determinants of the trade balance. Here, we argue that export and import composition are also key explanatory variables because some goods are inelastic and/or with a high added value, directly and indirectly affecting income and price elasticities and trade balance. Thus, if exports and/or imports significantly consist of price inelastic products, then, a positive and a negative effect, respectively, should be expected on the trade balance. Using bilateral trade data and dynamic panel models, we found that the ratio of exports of crude petroleum and natural gas (price inelastic goods) to total exports is significantly and positively associated with the Russian trade balance in goods. For its part, Russian imports of high-tech goods (income elastic and price inelastic with a high added value) show a negative association. The goods balance of Russia also responded to changes in relative income, but there is only weak evidence of reactions to changes in the exchange rate. These findings partially explain the persistent surplus in the Russian trade balance and current account.     

The impact of public goods and services and public R&D on the non-observed economy size,wages inequality and growth

We develop a general equilibrium endogenous growth model in which final goods can be produced either in the Non-Observed Economy (NOE) or in the Official Economy (OE). In particular, by solving transitional dynamics numerically towards the unique and stable steady state, we show that, by affecting the technological-knowledge bias in favour of the OE, productive public goods and services and public policies promoting R&D explain the simultaneous rise in the OE size, the wage premium in favour of OE workers and the economic growth rate. These results are mainly in line with empirical evidence for developed countries, since the 1990s.     

Targeting public goods to the poor in a segregated economy: An empirical analysis of central mandates in rural India

While local governments are increasingly being vested with control over funds for public goods, concern over the capture of decentralized funds by local elites has led decentralization to be combined with central mandates which require a certain proportion of funds to directly benefit the poor. If local capture is pervasive, however, central mandates may not be effective. Despite the popularity of this combination of decentralization and centralized control, there is little empirical evidence which separately identifies their effect on investment in public goods, and hence assesses the effectiveness of central mandates. This paper provides such evidence, using data collected by the authors for the North Indian state of Punjab, an economy where economic conditions facilitate such an analysis. We find that central mandates are effective, enhancing intra-village equality in expenditure on public goods. This finding informs the debate on the equity effects of centralized versus decentralized programs.     

Bureaucratic discrimination in electoral authoritarian regimes: Experimental evidence from Russia

Are investors in electoral authoritarian regimes discriminated against for political activism? In this paper, we implement a simple experiment to test whether affiliation with the ruling party or the political opposition affects the probability that investors receive advice from investment promotion agencies in Russian regions. Between December 2016 and June 2017, we sent 1504 emails with a short question and a number of randomized treatments to 188 investment promotion agencies in 70 Russian regions. Although investment promotion agencies are nominally depoliticized in Russia, we find that switching the political affiliation of a potential investor from the opposition party “Yabloko” to the government party “United Russia” on average increases the chances to receive a reply by 30%. The effect strongly depends on regional levels of political competition, with higher levels of discrimination in regions that are less politically competitive.     

Competitive politics, simplified heuristics, and preferences for public goods

This paper examines the role of simplified heuristics in the formation of preferences for public goods. Political scientists have suggested that voters use simplified heuristics based on the positions of familiar parties to infer how a proposed policy will affect them and to cast a vote in line with their interests and values. Here, we use a two-stage field-survey experiment to investigate how knowledge of party positions affects policy choices. We followed standard procedures in developing an attribute-based choice experiment on alternative land-use policies in Switzerland. In contrast to the usual formulation, however, the hypothetical costs of the proposed policies were formulated as a percentage change in taxes. The benefit of this formulation relative to the usual absolute money amounts is that the credibility of the (hypothetical) costs for respondents does not depend on respondent income. Furthermore, the formulation allowed us to solicit party positions on the proposed policies. Six out of eight contacted parties provided their positions. We then conducted a split-sample mail survey where we included a table of the party positions with a subsample of the questionnaires. We report six main experimental results. (1) The response rate of the survey was unaffected by the party positions. (2) The proportion of no-choice answers was decreased by forty percent relative to the control. (3) The party information significantly affected the choices directly and in interaction with respondents' general attitudes towards public spending for nature and landscape conservation and thus affected the way how individuals mapped from general attitudes to preferences for specific policies. (4) The information interacted with educational level in only eight out of forty choice sets, suggesting that even the more educated relied on simplified heuristics. (5) Respondents who knew the party positions were more sensitive to the tax attribute. (6) For respondents with medium and higher tax bills, the resulting willingness-to-pay estimates were decreased by a factor of two to ten relative to the control. These findings suggest that the party information helped the respondents to articulate more consistent preferences than in the treatment without the party information.     

Illegal drugs and public corruption: Crack based evidence from California

Do illegal drugs foster public corruption? To estimate the causal effect of drugs on public corruption, we adopt the synthetic control method and exploit the fact that crack cocaine markets emerged in California in 1981, before reaching any other U.S. state. Our results show that public corruption more than tripled in California in the first three years following the arrival of crack cocaine. We argue that this resulted from the particular characteristics of illegal drugs: cheap technology and rigid demand, which fosters a convergence of interests between criminals and corrupted public officials resulting in a positive causal impact of illegal drugs on corruption.     

Labor taxation, public finance, and wage determination: evidence from OECD countries

This paper analyzes the relationship between unemployment, average effective labour tax rates and public spending in 17 OECD countries. The focus is on the degree of centralization and cooperation in wage setting. Estimation results from a dynamic time-series-cross-section model suggest that the countries where wage setting takes place at the firm level have used labour taxes less extensively in financing welfare spending, compared to countries with centralized or decentralized bargaining. This is consistent with another finding, according to which labour taxes distort the labour demand the least in the countries with firm level bargaining.     

Trade liberalization and trade performance of environmental goods: evidence from Asia-Pacific economic cooperation members

In this article, we study the impact of trade liberalization, including reductions in both tariff and nontariff trade barriers, on environmental goods (EGs) exports. Using bilateral trade data from 20 Asia-Pacific Economic Cooperation members, we find that tariff reduction in an exporting country has a larger positive impact on its exports of EGs than tariff reduction in an importing country. Our results also show that a lower nontariff barrier in an importing country increases its imports of EGs. A considerable amount of heterogeneity also exists in subsample results based on countries’ income levels.     

Dissertation abstract: Contribution to a public good - Theoretical analysis and experimental evidence

The work undertook is located between Public Economic Theory and Experimental Economics. The object of the thesis consists in analysing the aggregate behavior and the individual heterogeneity in a voluntary contribution game. The thesis defended here is that overcontribution in comparison to the Nash equilibrium of the game, can not be explained neither by judgement errors, nor by the information on the individual behaviour of the members in a one given group. The level of contribution observed remains nevertheless inferior to the one simulated using the E.W.A. learning model. The dissertation is composed of three parts and six chapters. The first chapter expresses the various theoretical mechanisms of production of a public good, while the second one presents an overview of the experimental literature using voluntary contribution mechanisms. The second part carries on the introduction of an interior solution in a public good game in order to distinguish an explanation of overcontribution in terms of mistakes or strategies. While chapter three presents the most important works in literature that use an interior solution, the fourth chapter constitutes a personal contribution consisting in an experiment with an interior optimum. Our main result is that individuals contribute a constant part of their social optimum and that overcontribution is not explained by error. We test then the simple learning model R.L. using the observed data on the aggregate level. This model predicts well the observed behaviour. The third part is composed of two experiments where the environment of players is modified. We introduce in chapter five promises as cheap talk and find that they increase contributions at the aggregate level. In chapter six, various conditions of information on individual contributions are tested. The parameter tested is the level of information on “neighbours” contributions given to players. One of the treatments presents full information about individual contributions of the members of the group, while this information is incomplete in the other treatments. Our results show that information has no effect on the level of contribution. We simulate then the EWA learning model both at the aggregate and the individual levels and compare the simulated data to the experimental one. These simulations predict a level of contribution that is higher that the one observed in the experiment. JEL Classification C91, C92, H41 Dissertation Committee: Alan Kirman (Ph.D. Advisor), Université d’Aix-Marseille III Marie-Claire Villeval (Chair), GATE, Lyon, France Jordi Brandts, Universitat Autonoma Barcelona, Spain Charles Noussair, Emory University, Alanta, GA, U.S.A. Sylvie Thoron, GREQAM & Université du Var, France Marc Willinger, Université de Montpellier I, France     

Revisiting the impact of impure public goods on consumers’ prosocial behavior: A lab experiment in Shanghai

In this study, we implemented a dictator game experiment to examine how the increase of the public characteristic in an impure public good affects individuals’ prosocial behaviour. A within‐subject design was used in the experiment. The dictator game was repeated six times with an impure public good introduced in four of them. We observe that the increase of the public characteristic in an impure public good partly crowds out individuals’ subsequent donations, which could be explained by a seemingly ‘mental accounting’ mental process. In addition, we also find that the selfish behaviour of individuals in dictator games with impure public goods, to some extent, has an inertia influence on their subsequent donations when the impure public good is removed.     

Local flexibility in wage setting: evidence from the Norwegian local public sector

The public sectors in the Scandinavian countries have been prominent examples of centralized wage-setting systems. In Norway, more room for local flexibility was implemented by a wage frame system introduced in 1990 in which the national wage scale system merely works like a minimum wage system. We analyze the effect of this reform using a unique database where we can track employees and their local government over time and explore the consequences of controlling for fixed individual effects and fixed employer effects. We find that the wage dispersion increased across local governments after 1990, and that wages to some extent became more responsive to local government income, monopsony power and other local government characteristics after the reform. However, the numerical effects of the reform are estimated to be quite small.     

Targeted characteristics and use of socially marketed preventive health goods: evidence from condoms in sub-Saharan Africa

Social marketing is a popular method for allocating targeted publicly funded preventive health goods in poor countries. However, low demand among targeted groups may inhibit take-up relative to non-targeted groups, ownership may not result in use, and there exists little large-scale evidence on how use of socially marketed goods varies by targeted characteristics. I assemble national household survey data from 27 sub-Saharan African countries to examine how use of one of the most common socially marketed preventive health goods (i.e. male condoms) varies by the main targeted characteristics (i.e. low income, low educational attainment, and high HIV risk).

The results suggest that the majority of condoms used are socially marketed condoms, engaging in transactional sex is associated with an increased likelihood of using a socially marketed condom brand, and low-income/low educational attainment are not associated with increased likelihoods of using socially marketed brands. The fact that distribution targets low socioeconomic status groups and relative use remains low suggests that weak demand for condoms among these groups inhibits use. Policymakers should consider mechanisms to increase demand and to further refine targeting efforts.     

Tax perceptions and the demand for public expenditure: evidence from UK micro-data

Using responses from the 1995 British Social Attitudes Survey (BSAS), this paper assesses if there is evidence of voter misperception of tax costs. We find convincing evidence of income tax (IT) and value added tax (VAT) misperceptions, with a systematic bias towards overestimation of tax burdens for VAT, contrary to predictions of the fiscal illusion literature. We then integrate tax misperceptions into a model of demand for public expenditure. Voters' spending preferences are strongly related to their incomes, actual tax costs, and other fiscal-related household characteristics. A tendency to overestimate tax burdens appears to have only a modest influence on demands for public spending.