An Experimental Test Of The Public Goods Crowding-Out Hypothesis

James Andreoni A

415 citations0/0 files storedAmerican Economic Review

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Experimental Behavioral Economics Studies Game Theory and Voting Systems Economic Policies and Impacts

Abstract

This paper presents an experimental test of the proposition that government contributions to public goods, funded by lump-sum taxation, will completely crowd out voluntary contributions. It is found that crowding-out is incomplete and that subjects who are taxed are significantly more cooperative. This is true even though the tax does not affect the Nash equilibrium prediction. This result is taken as evidence for alternative models that assume people experience some private benefit from contributing to public goods. Copyright 1993 by American Economic Association.

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