Some Further Implications of Incorporating the Warm Glow of Giving into Welfare Measures: A Comment on the Use of Donation Mechanisms by Champ et al

Champ et al.[ J. Environ. Management 33, 151–162 (1997)] claim that they have (a) explored the welfare implication of warm glow for Hicksian measures of value for public goods and (b) established that actual donations place a “theoretical lower bound” on such values. We extend their model to show that warm glow introduces non-neutrality between the value of the good under public and private provision. The resulting ] implication of non-invariance of the benefit measure within benefit-cost analysis is highlighted. We further demonstrate that, in an important area of application, the hypothesis of Champ et al.that donations place a lower bound on Hicksian values may be invalidated.