Introduction

Many important phenomena of interpersonal interaction are opaque to standard economic analysis. This is particularly clear regarding the decentralised provision of public goods. I start with the standard model, discuss relevant evidence, then critically review the main alternatives. These all posit some form of non-selfish behaviour. Also, the accounts often propose some form of interrelatedness between individual agents in order to attenuate the crowding out prediction of the standard model. I argue that, to accommodate experimental data, models should be capable of predicting crowding in. Consideration of non-economic approaches to explaining contributions indicates that progress might require investigating the importance of social context and/or a departure from methodological individualism. Attention ought also to be paid to distinguishing between the effects of moral motivation and conformism.

Real examples of the explanandum include donations by individuals to organisations that produce goods and services but either do not, or cannot, practise exclusion. This comprises cases such as the Royal National Lifeboat Institute (RNLI) in the United Kingdom, large-scale international voluntary organisations such as Friends of the Earth, the World Wide Fund for Nature (WWF) and Greenpeace, and cancer research organisations. Non-financial voluntary contributions comprise, inter alia, the voluntary recycling of household waste, voting and blood donation where it is not remunerated.

These cases are of great practical, not just theoretical, importance. Though individuals typically give a tiny fraction of their income, in aggregate this generates significant economic activity. The Charities Aid Foundation (Saxon-Harrold and Kendall, 1995) reports the following statistics.