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Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment

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  • Buckley, Neil
  • Cuff, Katherine
  • Hurley, Jeremiah
  • Mestelman, Stuart
  • Thomas, Stephanie
  • Cameron, David

Abstract

This paper presents the results of a revealed-choice experiment testing the theoretical predictions of political economy models regarding public support for a publicly provided private good financed with proportional income taxes when individuals can purchase the good privately and either continue to consume public provision (‘top-up’) or forego public provision (‘opt-out’), but in each case continue to pay income taxes. Our laboratory results confirm behavior is consistent with the predicted majority-preferred tax rate under mixed financing with top-up, but we identify preferences for significantly higher rates of public provision than predicted under mixed financing with opt-out. Using non parametric regression analysis, we explore the relationship between individuals’ top-up and opt-out decisions and both their income levels and the implemented tax rates.

Suggested Citation

  • Buckley, Neil & Cuff, Katherine & Hurley, Jeremiah & Mestelman, Stuart & Thomas, Stephanie & Cameron, David, 2015. "Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 177-196.
    • Handle: RePEc:eee:jeborg:v:111:y:2015:i:c:p:177-196
    DOI: 10.1016/j.jebo.2014.12.016
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    1. Arijit Sen, 2024. "A tale of declining public provision and burgeoning private supplements," Indian Economic Review, Springer, vol. 59(1), pages 287-308, October.
    2. Buckley, Neil & Cuff, Katherine & Hurley, Jeremiah & Mestelman, Stuart & Thomas, Stephanie & Cameron, David, 2016. "Should I stay or should I go? Exit options within mixed systems of public and private health care finance," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 62-77.
    3. König, Tobias & Lausen, Tobias & Wagener, Andreas, 2016. "Image concerns and the political economy of publicly provided private goods," Discussion Papers, Research Unit: Market Behavior SP II 2016-214, WZB Berlin Social Science Center.
    4. Friedrichsen, Jana & König, Tobias & Lausen, Tobias, 2021. "Social Status Concerns and the Political Economy of Publicly Provided Private Goods," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 131(633), pages 220-246.
    5. Stephanie Thomas, 2016. "Playing by the rules? Agreement between predicted and observed binary choices," Department of Economics Working Papers 2016-12, McMaster University.
    6. Brosig-Koch, Jeannette & Hennig-Schmidt, Heike & Kairies-Schwarz, Nadja & Kokot, Johanna & Wiesen, Daniel, 2020. "Physician performance pay: Experimental evidence," HERO Online Working Paper Series 2020:3, University of Oslo, Health Economics Research Programme.
    7. Franziska Brendel & Lisa Einhaus & Franziska Then, 2021. "Resource scarcity and prioritization decisions in medical care: A lab experiment with heterogeneous patient types," Health Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 470-477, February.

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