| Property | Value |
| Name | Local Environmental Control and Institutional Crowding-out. World Development |
| Description | C√°rdenas, J.C., J.K. Stranlund and C.E. Willis. 2000. Local Environmental Control and Institutional Crowding-out. World Development. 28 (10): 1719-1733. Access from the author's websiteRegulations that are designed to improve social welfare typically begin with the premise that individuals are purely self-interested. Therefore, in a situation in which private and social interests diverge, it should be possible to bring about a welfare improvement by imposing rules that provide the necessary incentives for more socially efficient choices. However, experimental evidence shows that individuals do not typically behave as if they are purely self-interested; they tend to make choices that strike a balance between self and group interests. From experiments performed in several villages in Colombia, we found that a regulatory solution for an environmental dilemma that standard theory predicts would improve social welfare clearly did not. This surprising result occurred because individuals confronted with an external regulation began to exhibit less other-regarding behavior and, instead, made choices that were more consistent with pure self interests; that is, the regulation itself appeared to crowd out other-regarding behavior. The implication is that a policy design aimed simply at establishing incentives that move purely self-interested individuals toward more efficient choices will not necessarily improve social efficiency if the institution itself lessens civic-mindedness and encourages more selfish behavior. |
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| Filesize | Link |
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