Empathy and the Efficient Provision of Public Goods

Geoffrey Heal

No 29255, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I consider the effect of empathy towards others on the internalization of interpersonal externalities and on private contributions to the provision of public goods. I show that if preferences are empathetic in the sense of depending on the well-being of others, then in an extreme case external effects are fully internalized, and private contributions to the provision of a public good will be sufficient for it to be provided at an efficient level. Furthermore I show that an increase in the level of empathy shown by any agent will lead to an increase in the level of provision of the public good, and that as empathy levels increase towards their upper bound, the level of provision of the public good converges to the efficient level. Under certain conditions an increase in empathy is Pareto improving. As it is well-documented that people display some degree of empathy, it is arguable that our failure to provide public goods at efficient levels is attributable to lack of empathy as well as to the free rider problem.

JEL-codes: H00 H23 H41 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-isf, nep-pbe and nep-pub
Note: EEE PE
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Citations: View citations in EconPapers (2)

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