Econ 2230: Public Finance


Lise Vesterlund


Office hours:  by apt.

Meeting Location and time:

4900 WW Posvar Hall, MW 11:00-12:15 pm

Course Information

Lecture 1: Introduction and Pure Public Goods

·         Samuelson, Paul A. “The Pure Theory of Public Expenditure,” Review of Economics and Statistics, Nov. 1954, 387-389

·         Lecture 1


Lecture 2: Private Provision of Pure Public Goods

·         Bergstrom, T., L. Blume, and H. Varian, “On the Private Provision of Public Goods,” Journal of Public Economics, 1986, v. 29, 25-49


Lecture 3: Limits of Pure Altruism

·         Bergstrom, T., L. Blume, and H. Varian, “On the Private Provision of Public Goods,” Journal of Public Economics, 1986, v. 29, 25-49

·         Andreoni, J., “Privately Provided Public Goods in a Large Economy: The Limits of Altruism,” Journal of Public Economics, February 1988, v. 35, 57-73


Lecture 4: Impure Altruism

·         Andreoni, J., “Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving,” Economic Journal, 100, 1990.


Lecture 5: Crowding Out Field Evidence

·         Kingma, B. (1989), “An Accurate Measurement of the Crowd-Out Effect, Income Effect, and Price Effect for Charitable Contributions,” Journal of Political Economy, 97, 1197-1207.

·         Hungerman, Daniel, “Are Church and State Substitutes? Evidence from the 1996 Welfare Reform,” Journal of Public Economics, December 2005, p. 2245-2267.

·         Lecture 5


Lecture 6: Crowding Out: Field and Lab Evidence

·         Andreoni, J. and A. Payne, “Do Government Grants to Private Charities Crowd Out Giving or Fundraising?” American Economic Review, American Economic Review, 93(3), June 2003, 792-812.

·         Andreoni, J and A. Payne, “Is Crowding Out Due Entirely to Fundraising? Evidence from a Panel of Charities.” forthcoming Journal of Public Economics, 2011.

·         Andreoni, James, “An Experimental Test of the Public Goods Crowding-Out Hypothesis,” American Economic Review,1993, 83, 1317-1327

·         Lecture 6


Lecture 7: Motives for Giving (cont.)

·         Bolton, G. and E. Katok (1998), “An Experimental Test of the Crowding Out Hypothesis: The Nature of Beneficient Behavior,” Journal of Economic Behavior and Organization, 37, 315-331

·         Ribar, D. C., and M. O. Wilhelm (2000), “Altruistic and Joy-of-giving Motivations in Charitable Behavior,” Journal of Political Economy, 110:2 (April 2002), 425-57

·         Lecture 7


Lecture 8: Mechanism Design

·         Groves, T. and J. Ledyard, 1977, Optimal allocation of public goods: A solution to the 'free rider' problem, Econometrica 45, no. 4, 783-809.

·         Lecture 8


Lecture 9: Mechanism Design- Experimental Evidence

·         Attiyeh, Greg, Robert Franciosi, Mark Isaac, "Experiments With the Pivot Process for Providing Public Goods," Public Choice, 2000

·         Chen, Yan, "Incentive-compatible mechanisms for pure public goods: A survey of experimental research" Handbook of Experimental Economics Results, 2008 – Elsevier

·         Chen, Yan and Robert Gazzale, “When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting” The American Economic Review, 94(5), December 2004, pages 1505–1535.

·         Lecture 9


Lecture 10: Social Choice

·         Ch. 21 Mas-Colell, Whinston, and Green

·         Lecture 10


Lecture 11: Median voter and empirical evidence (student presentations)

·          LeVeaux, C. and Garand, J. C. (2003), Race-Based Redistricting, Core Constituencies, and Legislative Responsiveness to Constituency Change. Social Science Quarterly, 84: 32–51.  

·         Washington, E. (2008), “Female Socialization: How Daughters Affect Their Legislator Fathers' Voting on Women's Issues,” The American Economic Review Volume 98, Number 1, pp. 311-332(22)

Lecture 12: Median voter and empirical evidence (student presentations)

·         Levitt, S, (1996), “How Do Senators Vote? Disentangling the Role of Voter Preferences, Party Affiliation, and Senator Ideology,” The American Economic Review Vol. 86, No. 3 (Jun., 1996), pp. 425-441

·         Lee, David, and Enrico Moretti, and Matthew J. Butler (2004). “Do Voters Affect or Elect Policies? Evidence from the U.S. House,” Quarterly Journal of Economics, 119(3), 807-859

Lecture 13: Voter rationality (student presentations)

·         Mullainathan, S. and E. Washington (2009). “Sticking with Your Vote: Cognitive Dissonance and Political Attitudes”, American Economic Journal: Applied Economics, 1(1), 86-111.

·         Wolfers, Justin (2007). “Are Voters Rational? Evidence from Gubernatorial Elections”, unpublished working paper.


Lecture 14: Fundraising: Lotteries

·         Morgan, J. “Financing Public Goods by Means of Lotteries,” Review of Economic Studies, 67, 2000, 761-84.

·         Lecture 14


Lecture 15: Fundraising: Lotteries(cont)

·         Morgan, J. “Financing Public Goods by Means of Lotteries,” Review of Economic Studies, 67, 2000, 761-84.

·         Morgan, J. and M. Sefton, “Funding Public Goods with Lotteries: An Experiment,” Review of Economic Studies, 2000, 785-810.

·         Dale, D, “Charitable Lottery Structure and Fund Raising: Theory and Evidence,” Experimental Economics, 2004

·         Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2006. "Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 747-782, May.

·         Lecture 15


Lecture 16: Fundraising: Auctions

·         Goeree, Jacob, Maasland, E., Onderstal, S. and Turner, J., "How (Not) to Raise Money," Journal of Political Economy, 2005.

·         Orzen, Henrik, "Fundraising through Competition: Evidence from the Lab," CeDEx Discussion Paper No. 2008-11

·         Schram, A. J., Onderstal, S., May 2009. “Bidding to give: An experimental comparison of auctions for charity.” International Economic Review 50 (2), 431–457.

·         Carpenter, J., Holmes, J., Matthews, P. H., 2008. “Charity auctions: a field experiment.” Economic Journal 118, 92–113.

·         Lecture 16


Lecture 17: Fundraising: Auctions (cont) and sequential giving

·         Onderstal, Sander, Arthur J.H.C. Schram, and Adriaan R. Soetevent, 2011, “Bidding to Give in the Field: Door-to-Door Fundraisers had it Right from the Start,” click here to download

·         Varian, Hal R., “Sequential Provision of Public Goods,” Journal of Public Economics, 1994, 165-86.

·         Romano R. and H. Yildirim, Why charities announce donations: a positive perspective, J.Public Econ. 81 (2001), 423-447.

·         Lecture 17


Lecture 18: Announcement: changing the set of equilibria


·         Bagnoli, Mark and Bart Lipman, “Provision of Public Goods: Fully Implementing the Core Through Private Contributions,” Review of Economic Studies, Oct. 1989.

·         Andreoni, James, “Toward a Theory of Charitable Fundraising,” Journal of Political Economy, 1998, 1186-1213.

·         List, John and David Lucking-Reiley, “The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign” Journal of Political Economy, 2002, 110, 215-233

·         Lecture 18


Lecture 19: Announcement: Signaling quality and donor type

·         Vesterlund, L., 2003. The informational value of sequential fundraising. Journal of Public Economics 87, 627–657.

·         Potters, J., M. Sefton, and L. Vesterlund, “After You - Endogenous Sequencing in Voluntary Contribution Games,” Journal of Public Economics, Volume 89, Issue 8, Pages 1355-1592, August 2000

·         Shang, Jen and Rachel Croson, “Field Experiments in Charitable Contributions: The Impact of Social Influence on the Voluntary Provision of Public Goods,” Economic Journal, 2009

·         Lecture 19


Lecture 20: Announcement: Signaling and image motivation

·         Benabou and Tirole, “Incentives and Prosocial Behavior," with Jean Tirole, American Economic Review, 96(5), December (2006), 1652-1678.

·         Rege, Mari, and Kjetil Telle, “The impact of social approval and framing on cooperation in public good situations,” Journal of Public Economics, Volume 88, Issues 7-8, July 2004, Pages 1625-1644

·         Soetevent, Adriaan R., “Anonymity in Giving in a Natural Context—a Field Experiment in 30 Churches,” Journal of Public Economics, Volume 89, December 2005, p. 2301-2323.

·         Lecture 20


Lecture 21: Subsidy

·         Chetty, Raj, Adam Looney, and Kory Kroft. 2009. "Salience and Taxation: Theory and Evidence." American Economic Review, 99(4): 1145–77.

·         Gruber, Jonathan, “Pay or pray? The impact of charitable subsidies on religious attendance.” Journal of Public Economics, Volume 88, Issue 12, December 2004, Pages 2635-2655

·         Saez, Emmanuel, 2004. "The optimal treatment of tax expenditures," Journal of Public Economics, Elsevier, vol. 88(12), pages 2657-2684, December

·         Lecture 21

Lecture 22: Matching

·         Meier, Stephan, "Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment," Journal of the European Economic Association, Vol. 5, No. 6 (Dec., 2007), pp. 1203-1222

·         Karlan, Dean and John A. List, "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," The American Economic Review, Vol. 97, No. 5 (Dec., 2007), pp. 1774-1793

·         Eckel, Catherine C. and Philip J. Grossman, Rebate versus matching: does how we subsidize charitable contributions matter?, Journal of Public Economics, Volume 87, Issues 3-4, March 2003, Pages 681-701

·         Lecture 22

Lecture 22: Groups: Norms, Institutions and sorting

·         Elinor OstromGoverning the Commons, chapter 3, Governing the Commons: The Evolution of Institutions for Collective Action

·         Ahn, T.K., Mark Isaac and Timothy C. Salmon. Coming and Going: Experiments on Endogenous Group Sizes for Excludable Public Goods. Journal of Public Economics, Vol. 93, No. 1-2 (2009): 336-351.

·         Ahn, T.K., Mark Isaac and Timothy C. Salmon.Endogenous Group Formation, Journal of Public Economic Theory, Vol 10. No. 2 (2008) 171-194.

·         Sutter, Matthias, Stefan D. Haigner, and Martin G. Kocher. 2009. “Choosing the Carrot or the Stick? – Endogenous Institutional Choice in Social Dilemma Situations.”

·         Cinyabuguma, Matthias, Talbot Page, and Louis Putterman. 2005. “Cooperation under the Threat of Expulsion in a Public Goods Experiment.” Journal of Public Economics, 89: 1421-1435.

·         Theodore Bergstrom, The Uncommon Insight of Elinor Ostrom, Scandinavian Journal of Economics, 2010

·         Ehrhart, Karl-Martin, and Claudia Keser. 1999. “Mobility and Cooperation: On the Run.”

·         Gürerk, Özgür, Bernd Irlenbusch, and Bettina Rockenbach. 2006. “The Competitive Advantage of Sanctioning Institutions.” Science, 312(5770): 108-111

·         Lecture 23


Problem Sets








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