Social Influences and the Private Provision of Public Goods: Evidence from Charitable Contributions in the Workplace

This paper investigates the factors that influence an individual's decision to make voluntary contributions to a public good, focusing on the role of social influences. Measuring social influences is challenging due to several factors: group selection may be based on unobservable tastes, there may unobservable shocks that affect all group members, and the behavior of all group members is determined simultaneously. Proprietary data from the workplace giving campaign of a large national company are used. These data contain detailed information, which can be used to overcome the difficulties often associated with measuring social influences. This paper formulates the problem of measuring social influences as one of estimating the relationship between individual behavior and the behavior of peers by selecting appropriate instruments for group behavior. It also identifies the conditions under which various choices of instruments are appropriate. The results suggest that individual giving behavior is affected by social influences.