Crowding-out voluntary contributions to public goods

We test the null hypothesis that involuntary transfers for the provision of a public good will completely crowd-out voluntary transfers against a warm-glow hypothesis that crowding-out will be incomplete because individuals care about giving. Our design extends existing work by considering two levels of the involuntary transfer and by using a design in which all subjects see all transfer treatments. We analyse the data with careful attention to boundary effects. The data reject the null hypothesis of complete crowding-out of voluntary transfers over the range of involuntary transfers considered, but suggest that crowding-out increases as the involuntary transfer increases and sufficiently large involuntary transfers may offset the benefits of warm-glow giving. (C) 2002 Elsevier Science B.V All rights reserved.