Christmas Lights in Berlin. New Empirical Evidence for the Private Provision of a Public Good

Beate Jochimsen

FiFo / December 2019 / Discussion Paper, FiFo-Köln

Abstract
The phenomenon of private contributions to public goods is broadly discussed in the literature. However, the possibility to verify theoretical results empirically is often limited because sufficient data on donors is lacking. Christmas lights in Berlin have been completely financed with private contributions. As sufficient information on donors is available, this setting offers the rare possibility to explore their characteristics. On a theo-retical fundament, two questions are addressed: First, which characteristics are responsible for the decision to donate at all, and second, what determines the size of the donation. Using a Heckman selection model we show, first, that traditional pub-lic finance theory can be confirmed. Economically stronger potential contributors are more like to donate and donate higher amounts. Second, status drives the decision to donate, too. Third, profit maximization is a further motive to donate and influences the donated amount. The results are robust to vari-ous controls. They offer the opportunity to address potential donors more specifically and, hence, should be of interest for future attempts to raise private donations.