Public Goods Provision and Well-Being: Empirical Evidence for the Warm Glow Assumption

Abstract

Using a broad multi-country sample we find that individuals who contribute to the public good of environmental protection report higher levels of life satisfaction and happiness. We provide several pieces of evidence that this positive relationship between contributions and well-being is due to a warm-glow motive. First, well-being does not increase proportionally with contributions, consistent with the warm-glow assumption that it is the act of giving that generates utility. Second, individuals who think of themselves as socially responsible derive greater satisfaction from their contribution to environmental protection as would be the case if the contribution reinforces a favorable self image. Interestingly, conforming to a social norm may be a motivation for some individuals, but the presence of this motive depends on individual attitudes towards social responsibility. Among those who express the highest level of social responsibility, conforming to the norm makes them less satisfied with life. However, individuals with a moderate level of social responsibility do report higher levels of happiness when their public goods contributions conform to societal norms.

Keywords: Public goods, warm glow, happiness

JEL Classification: H4, Z13, Q5