Endogenous institutions and the possibility of reverse crowding out

We report a series of laboratory experiments designed to investigate whether the historical crowding out of private and religious provision of public goods by the government is reversible. The experimental design employs an intentionally sequenced four stage treatment series. The first stage uses th...

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Bibliographic Details
Published inPublic choice Vol. 156; no. 1/2; pp. 253 - 284
Main Authors Isaac, R. Mark, Norton, Douglas A.
Format Journal Article
LanguageEnglish
Published Boston Springer 01.07.2013
Springer US
Springer Nature B.V
Subjects
Churches
Cooperation
Crowding out
Dominant strategy
Economics
Economics and Finance
Endogenous growth
Equilibrium
Expenditures
Experiment design
Experiments
Great Depression
Implementation
Income taxes
Institutions
Laboratories
Motivation
New Deal
Political Science
Preferences
Private Sector
Public economics
Public Finance
Public good
Public Goods
Religion
Social capital
Social Services
Tax rates
Taxation
Taxes
Voters
Public Good
Voluntary Contribution
Public Good Provision
Private Provision
Median Voter
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Summary:We report a series of laboratory experiments designed to investigate whether the historical crowding out of private and religious provision of public goods by the government is reversible. The experimental design employs an intentionally sequenced four stage treatment series. The first stage uses the standard voluntary contributions mechanism followed by a mandatory tax in the second stage. The last two stages replace the mandatory tax with an endogenous tax, voted on each period and chosen by median voter rule. Some of the experiments involve an additional change in the fourth stage when the preferences of a small subset of participants are transformed. The pattern of results we obtain is diverse, but typically different than would be expected from stark voluntary contributions processes. There is a strong pattern that choices under the endogenous tax are influenced by initial levels of trust, indicating that mediating institutions in society may play an important role in the possibility of reverse-crowding out. Finally, two sessions with a special subject pool highlight the importance of considering self-selection and intentionality in the study of public goods provision. Reprinted by permission of Springer
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ISSN:0048-5829
1573-7101
DOI:10.1007/s11127-011-9897-5