Economics of Philanthropy in Conjunction with Science of Philanthropy Initiative (SPI)
Friday, Jan. 3, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Daniel Hungerman, University of Notre Dame
The Pledging Puzzle: How Can Revocable Promises Increase Charitable Giving?
AbstractWhat is the value of pledges if they are often reneged upon? In this paper we show -- both theoretically and experimentally -- that pledges can be used to screen donors and to better understand their motives for giving. In return, nonprofit managers can use the information they glean from pledges to better target future charitable giving appeals and interventions to donors, such as expressions of gratitude. In an experiment, we find that offering the option to pledge gifts induces self-selection. If expressions of gratitude are then targeted to individuals who select into pledges, reneging can be significantly reduced. Our findings provide an explanation for the potential usefulness of pledges.
Sophistication and Giving
AbstractWe present evidence of suboptimal behavior in charitable giving. Using data from a large field experiment, we find that, on average, donors could have increased the money received by their charities by 18 percent had they acted strategically when given the opportunity to have their final donation to the charity increased by a match. This nonstrategic behavior is not limited to a few donors -- a total of 20 percent of donors could have doubled the money received by the charity. This behavior is much more prevalent among smaller donors (donations below $200). Our results can help reconcile seemingly contradictory behavior of donor responsiveness to incentives across populations.
- H4 - Publicly Provided Goods
- D9 - Micro-Based Behavioral Economics