Description:
We exploit a quasi-natural experiment in law-violation behaviors in response to the Clean Winter Heating Policy (CWHP) implemented in northern China from 2017 to 2019. Our results show that treated villagers were more likely to violate laws against burning agricultural waste and exhibit less prosocial behaviors in both incentivized dictator games and public goods games. The results hold for both the conventional Difference-In-Differences analysis and the newly proposed weighted CATT estimates. We find two factors that likely play a part. First, the CWHP was perceived as a negative income shock. Thus, in response, villagers would want to cut down expenditures on the disposal of corn stalks and straw and behave more selfishly in incentivized games. Second, the CWHP led to discontent and provoked farmers to burn straw. Additional evidence suggests that such law violations and less prosocial behaviors could have been avoided by granting more generous subsidies up front