Does ‘free-sampling’ enhance the value of public goods?

Abstract

This study investigates whether ‘free sampling’ enhances the value of public goods. Using data from a unique field experiment, we find that the WTP premium effect associated with a brief opportunity to consume a local public good for free is relatively small and temporary. It therefore may not be cost effective to offer free-participation incentives for public goods.

Notes

¹ Free samples are different than pre-commitment enticements, where if you agree to sign up for a good or service for a specific period of time you get the initial units of the good for free.

² Curbside recycling fits the description of an Andreoni (1990) impure public good due to its private (or ‘egoistic’) and public (‘altruistic’) components.

³ A co-mingled system means that all of the recyclable materials (e.g. paper, plastic, metal, etc.) are mixed together by the household in a single container.

⁵ The survey instruments are available from the authors upon request.

⁴ For a complete model of the household's decision problem see Aadland and Caplan (2006), Technical Appendix, available at www.uwyo.edu/aadland/research/recycle.

⁶ The bids were chosen with equal probabilities from the set of integers 2, 4 and 6. This set encompassed the range of feasible household fees that the Logan Environmental Department originally considered charging for the voluntary CRP (personal communication with Director Issa Hamud).

⁷ NLOGIT version 3.0.10 is used to estimate Equation 2(2).

⁸ A host of additional explanatory variables were included in earlier estimations of Equation 2(2), such as attitudes toward recycling and the environment, monthly household waste generation, and past recycling behaviour, but were found to be insignificant in explaining variation in WTP. Both the input and output NLOGIT files for these earlier estimations are available from the authors upon request.

Table 1. Variable definitions and means

⁹ This result may not be so surprising. A larger household's financial resources might already be too thinly spread over other consumption goods, leaving less of its budget to devote to environmental goods irrespective of the household's environmental ethic.