Testing for Altruism

Testing for Altruism - Testing for Altruism and Social...

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Testing for Altruism and Social Pressure in Charitable Giving Stefano DellaVigna UC Berkeley and NBER John A. List UCh icagoandNBER Ulrike Malmendier UC Berkeley and NBER This version: July 15, 2009. Abstract Every year, 90 percent of Americans give money or time to charities. Is such generosity necessarily welfare enhancing? We present a theoretical framework that pinpoints two types of motivation: individuals like to give, e.g., due to altruism or warm glow, or individuals would rather not give but dislike saying no, e.g., due to social pressure. To distinguish the two types of motivation, we design a door-to-door fund-raising drive in which we vary the ability of households to seek or avoid a solicitor. Some households are informed about the exact time of solicitation with a f yer on the door-knob; thus, they can seek the fund-raiser if giving is welfare-enhancing, and avoid it if giving is welfare-decreasing. We F nd that the f yer reduces the share of households opening the door by 10 to 25 percent, suggesting that the average household seeks to avoid fund-raisers. Moreover, if the f yer allows checking a box for ‘Do Not Disturb’, giving is 30 percent lower. The latter decrease is concentrated among donations smaller than $10. These F ndings suggest that social pressure is an im- portant determinant of door-to-door giving. Combining reduced form insights from these treatments with data gathered from a complementary F eld experiment, we structurally estimate altruism and social pressure parameters. The estimates suggest that most of the door-to-door giving is due to social pressure, as opposed to altruism. PRELIMINARY AND INCOMPLETE. DO NOT CITE WITHOUT PERMISSION. We thank Stephan Meier, Klaus Schmidt, Daniel Sturm and the audiences in the Chicago Booth School of Business, Columbia University, Harvard Business School, UC Berkeley, UT Dallas, the University of Zurich, the 2009 San Francisco Applied Micro Conference, the Berkeley Conference in Behavioral Economics, the Munich Workshop on “Natural Experiments and Controlled Field Studies”, and the ASSA 2009 Meetings for helpful comments.
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1I n t r o d u c t i o n Jane the solicitor is making her yearly neighborhood rounds to raise money for the local Chapter of the Red Cross. She approaches Mr. Dowd’s house and is met at the door with a smile and nod. After the usual precursors, Jane inquires into whether Mr. Dowd would like to make a donation to the Red Cross. Jane notes that all proceeds will be earmarked for disaster relief in South Africa, where atrocities a f ect the lives of millions of children daily. Mr Dowd, being a kind and caring gentleman, donates $20 to the cause. Jane thanks Mr. Dowd, provides a receipt, and is on her way. Such transactions occur daily in the fund-raising world. In the US alone, roughly 90% of adults give money to at least one cause annually, many of which involve situations similar to the interaction between Jane and Mr. Dowd. Yet, we still know little about the motivations for such giving. Mr. Dowd may enjoy giving, either because he cares about this speci
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Testing for Altruism - Testing for Altruism and Social...

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