Motivate the crowd or crowd them out? Experimental evidence on the impact of local government spending on the voluntary provision of a green public good

Cities are increasingly being held accountable for their climate action. By demonstrating their pro-environmentality through their own climate-related activities, they aspire to encourage individual climate protection efforts. However, economic theory posits that this strategy may not be as promising as it appears. Since cities fund these initiatives using taxpayers’ money, their contributions may be perceived as substitutes, potentially crowding out private contributions to the same public good. Inspired by research on the crowding-in effects of social norms, leadership, and the expressive influence of laws, we challenge this argument. We conducted a framed field experiment to analyze whether providing information on the previous contributions made by the city itself has an impact on individual private contributions to the same public good. Results show no statistically significant evidence that city contributions reduce resident contributions. Instead, referencing fellow citizens increases contributors, attracting especially those less pro-environmentally oriented.