The Long-Term Impact of Matching and Rebate Subsidies When Public Goods are Impure: Field Experimental Evidence from the Carbon Offsetting Market

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract:In this paper, we investigate both short-and long-term impacts of financial stimuli on public goods provision when contributions are tied to individual harm-related behavior. We conduct a large-scaled field experiment to examine voluntary contributions to a carbon offsetting program during the online purchase of a bus ticket. We systematically vary the individual payoff structure by introducing different matching grants (1/3:1, 1:1, 3:1) and price rebates (r-25%, r-50%, r-75%). Our results show that price rebates are more effective than matching schemes in raising participation rates while matching grants induce higher contributions to the offsetting program. We suspect differences in the personal responsibility for the compensated emissions to drive this result. Analyzing repeated bookings, we find decreasing treatment effects for returning customers except for the case of 1:1 matching grants. The equal matching scheme is also the only intervention that increases net contributions of customers compared to the control group.

Matching Subsidies and Voluntary Contributions: A Review

“…Eckel and Grossman () do not find an effect for a matching rate of 0.25 but for 1/3, whereas Kesternich et al . () estimate a significant impact for a matching rate of 1 but not for 1/3. Helms McCarty et al .…”

“…How to ensure that the chosen matching rate is sufficient to create an effect? A matching rate of 1 has proven to be effective in crowding in donations in several settings (Davis, ; Gneezy et al ., , Huck et al ., ; Kesternich et al ., ). However, there are cases in which it did not work out (Davis, ; Karlan et al ., ; Helms McCarty et al ., ) and sometimes smaller matching rates have been sufficient (Davis, ; Huck et al ., ; Eckel and Grossman, ).…”

“…There is additional laboratory evidence that increasing the matching rate up to 1 can increase the likelihood to give (Eckel et al ., ). Despite this positive relation between the matching rate and the likelihood to give, increases above 1 have not been found to create an additional effect in the field (Karlan and List, ; Kesternich et al ., ). Yet, subgroups like females might remain responsive to increases of the matching rate above 1 (Knutsson et al ., ).…”

“…Additional evidence is offered by Kesternich et al . () who study a special public good setting in which subjects make binary choices. Customers of a German long‐distance bus operator have the opportunity to offset their carbon emissions at a predetermined price when purchasing tickets.…”

“…Kesternich et al . () identify a persistent effect of matching compared to the control group. For repeated bookings with the match still in place as well as for subsequent bookings in a period where the match is removed, the treatment group with a match of 1 has a significantly higher extensive margin and checkbook giving.…”