Altruism, Warm Glow and the Willingness-to-Donate for Green Electricity: An Artefactual Field Experiment

Abstract.The ongoing liberalization of electricity markets in most western countries forms the background of our artefactual field experiment. Using a Cheap talk design [R.G. Cummings and L.O. Taylor. American Economic Review89 (1999) 649–665] with supplementary monetary incentives, we test for presence of “warm glow” motivations [J. Andreoni. Journal of Political Economy97 (1989) 1447–1458; Economic Journal100 (1990) 464–477] in the willingness-to-donate for electricity generated from renewables. Our data from 200 participants supports impure altruism, that is, individuals benefit from both contributing to environmental quality and its current level when opting in favor of green electricity. Furthermore, we find evidence of crowding-out as well as crowding-in effects. Depending on the knowledge of people about electricity markets and the types of electricity contracts offered, “all-or-none” contracts are most likely to bring about crowding-out effects.

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