Inequality, outreach, and impact in public goods contributions

Abstract

Mobilizing domestic resources is vital in financing domestic investment and social programmes, which are essential for reducing poverty in developing countries. We consider citizens’ willingness to contribute to public goods as one mechanism for domestic resource mobilization. In particular, we are interested in how willingness to contribute varies on three dimensions: inequality in initial endowments, public good outreach (local vs. national), and the expected impact of giving. We conducted a preregistered (AEARCTR-0007746) online experiment with a sample of 900 respondents in South Africa. First, public goods game tasks with equal and unequal endowments were compared to estimate inequality impacts. Second, a dictator game decision with donations to a national charity was compared to the local public goods game to study the effect of project outreach. Finally, to estimate donation impact, charity decisions with quadrupled contributions were compared to those with doubled contributions. We find overall high levels of contribution, with much overlap across the different contexts considered. We note that the highest endowment proportion is contributed in the unequal context, with low endowment players giving the highest share of their endowments. Response time data shows that decisions take longer where donation impact is higher, and where endowments are unequal, particularly for those receiving lower endowments.