Motivate the Crowd or Crowd-Them Out? The Impact of Local Government Spending on the Voluntary Provision of a Green Public Good

Cities are increasingly hold accountable for climate action. By demonstrating their pro-environmentality through own climate-related activities, they not at least aspire to encourage individual climate protection efforts. Based on standard economic theory there is little reason to assume that this is a promising strategy. Financed by taxpayers’ money, cities’ contributions are considered as substitutes that crowd-out private contributions to the same public good. Inspired by research on providing information on reference group behavior, we challenge this argument and conduct a framed-field experiment to analyze the impact of reference group information on the voluntary provision of a green public good. We investigate whether information on previous contributions by fellow citizens or the city affect individual contributions. We do not find statistical evidence that city-level information crowds-out additional individual contributions. A reference to fellow citizens significantly increases the share of contributors as it attracts subjects that are not per-se pro-environmentally oriented.

Bartels, Lara and Martin Kesternich (2022), Motivate the Crowd or Crowd-Them Out? The Impact of Local Government Spending on the Voluntary Provision of a Green Public Good, ZEW Discussion Paper No. 22-040, Mannheim.