Policy Research

Identifiability of Individual Contributions in a Threshold Public Goods Experiment

Rachel Croson, Melanie Marks

Summary

Due to financial stress and the unpopularity of higher taxes, there is a renewed interest in voluntary contributions as the means of fund public goods in the United States. If projects are funded by voluntary contributions, government officials do not have to worry about the political implications of raising taxes. The goal is to provide public services without any waste of public resources through over-contribution. In this experiment, Croson and Marks tested the theory that providing more information about individual contribution behavior would promote more coordination among donors, leading to less waste. They investigated three treatments, Group Only, Individual-Anonymous, and Individual-Identifiable. In the Group Only treatment, subjects were informed of the group’s aggregate contribution to the public good. With the Individual-Anonymous treatment, subjects were given a list of the individual contributions in a random order, keeping the contributor’s identity anonymous. In the Individual-Identifiable treatment, both the individual’s amount of contribution and their identity were disclosed to the subjects. Of the three treatments, Group Only and Individual-Identifiable were the most successful. Individual-Anonymous led to the least amount of contributions and the least amount of coordination in funding the public good. Croson and Marks believe that the Individual-Identifiable treatment had a higher success rate than the Individual-Anonymous treatment because individuals were concerned with their reputation among the group. The possibility of others seeing their contributions led them to contribute much more than they did in the Individual-Anonymous treatment. The Group-Only treatment had a similar success rate, which Croson and Marks believe to stem from the effort of coordinating contributions within the group. In this experiment, Croson and Marks show that the dissemination of information can be an important factor in fundraising efforts.

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Policy Implications

Government officials can use the results of this study to shape their future fundraising habits. When looking to fund a public good, government officials should provide information about the contribution habits of others in the community. This will encourage more contributions and more coordination of contributions, which leads to less waste. Utilizing either the Group Only treatment or the Individual-Identifiable treatment to future fundraising efforts will significantly increase the amount of response they get to the project.