Working Paper: NBER ID: w26445
Authors: Matthew Kotchen; Katherine RH Wagner
Abstract: This paper makes three contributions to the literature on private provision of public goods. First, we identify limitations of the frequently used specification test that distinguishes between the standard models of pure and impure altruism based on the extent of crowding out. While the literature takes as given the result that crowding out should be less with impure altruism compared with pure altruism, we show that, in general, it can be either more or less. Second, we propose a more general test based on the presence of crowding in, rather than the extent of crowding out. Third, we provide empirical evidence. Using a unique panel data set on volunteerism in U.S. National Parks, we estimate the causal effect of changes in public funding within parks on the amount of within-park volunteerism. The overall finding is that each additional dollar of public expenditure crowds in 27 cents worth of volunteerism on average. We show how the estimates of crowding in, along with heterogeneity based on park and volunteer hour types, are theoretically consistent with the mainstay model of impure altruism.
Keywords: crowding in; impure altruism; volunteerism; public goods; national parks
JEL Codes: H40; H50; Q26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Public funding (H59) | Volunteer hours (J22) |
| Public funding (H59) | Economic value of volunteerism (J17) |
| Public funding (in environmental parks) (H54) | Volunteer hours (J22) |
| Public funding (in non-environmental parks) (H54) | Volunteer hours (J22) |
| Public funding (outdoor activities) (Q26) | Volunteer hours (J22) |