Do contributions to public goods increase if publicly disclosed?

Jun 14, 2010

Public disclosure of companies' pollution habits has been an effective method of reducing pollution in many countries. Similarly, research has shown that people's and firms' propensity to contribute to public good increases if their contributions are made public. Findings from the University of Gothenburg reveal that the expected positive effect of disclosure can sometimes be crowded out by other factors at play.

Economist Clara Villegas Palacio, University of Gothenburg, Sweden, has studied the effects of different extents of public disclosure. A clean environment is usually considered a public good. As the importance of environmental protection has gained support in recent years, several policy instruments aimed to control have been developed and tested in practice. These include environmental taxation, tradable emission rights and public disclosure of companies' pollution habits.

In several cases, the design of such policies gives them a social dilemma character where regulated agents have a clear incentive not to cooperate by not complying with the regulation. If nobody complies, however, then everybody is worse off than if they had cooperated by complying.

Sociologists and economists have studied how the likelihood of people playing by the rules is affected by different factors, including threats of sanctions, personal morals and other people's opinions.

Villegas Palacio's doctoral thesis explore how compliance with environmental regulations is determined by formal enforcement and technology availability and how cooperation in social dilemma situations is determined by interventions such as disclosure and of groups.

One chapter of her thesis, written together with Peter Martinsson, reveals the results of experiments conducted on Colombian university students. The chapter presents evidence indicating that the incentives provided by different disclosure treatments increase unconditional contributions to the public good compared to the no-disclosure treatment, although the effect is not statistically significant at conventional levels.

The expected positive effect (crowding-in) of disclosure on unconditional contributions may be offset by two other effects: (i) a crowding-out effect of image motivations given by the desire to appear intrinsically motivated rather than motivated by appearances; (ii) a crowding-out effect of intrinsic motivations (consistent with the motivation crowding theory of Frey and Jegen, 2001).

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

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xstos
not rated yet Jun 14, 2010
public disclosure and transparency improve everything and level the playing field. this is exactly why banks tenuously cling to off-balance sheet "assets" and opaque accounting, why the fed continuously inflates its problems away by buying bonds with printed money, and why BP is all of a sudden a bad guy when resource and energy companies take a dump all over the environment to make a buck. put it in the open and embarrass the crap out of them and they have incentive to change. it's the same principle as putting inmates to work with their crime brightly displayed on their jumpers. can you imagine if by law pedophiles had to get the word pedophile tattooed to their foreheads?!
Tan0r5
not rated yet Jun 15, 2010
Again the gobbledegook. Embarrassment is post event and too late for the injured. The others didn't get caught. BP got caught and will spend lifetimes fighting to avoid paying cleanup cost. Exxon is still fighting to avoid paying the clean up costs of the Valdez oil spill. GE fights not to pay cleanup costs for its Hudson River PCB contamination. The U.S. government can't stop fighting wars because the defense industry would lay off hundreds of thousands of employees. This would be a big embarrassment to politicians who would be blamed for the jobs lost.
Branding and public executions were the norm for centuries. Works only on those caught but didn't stop crime.
People have short memories. Companies will wait it out, fail, be bought out, merge, change names in a forever shell game. The only thing business cares about is the effect on profits and owner dividends.

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