Working Paper: NBER ID: w17473
Authors: Craig E. Landry; Andreas Lange; John A. List; Michael K. Price; Nicholas G. Rupp
Abstract: An important dialogue between theorists and experimentalists over the past few decades has raised the study of the interaction of psychological and economic incentives from academic curiosity to a bona fide academic field. One recent area of study within this genre that has sparked interest and debate revolves around the "hidden costs" of conditional incentives. This study overlays randomization on a naturally-occurring environment in a series of temporally-linked field experiments to advance our understanding of the economics of charity and test if such "costs" exist in the field. This approach permits us to examine why people initially give to charities, and what factors keep them committed to the cause. Several key findings emerge. First, there are hidden benefits of conditional incentives that would have gone undetected had we maintained a static theory and an experimental design that focused on short run substitution effects rather than dynamic interactions. Second, we can reject the pure altruism model of giving. Third, we find that public good provision is maximized in both the short and long run by using conditional, rather than unconditional, incentives.
Keywords: Charitable Giving; Behavioral Economics; Field Experiment; Incentives
JEL Codes: C93; D03; H41; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unconditional gifts (D64) | participation rates (J22) |
| unconditional gifts (D64) | average contributions (D64) |
| conditional gifts (D64) | participation rates (J22) |
| conditional gifts (D64) | average contributions (D64) |
| minimum contribution increases (D64) | rates of giving (D64) |
| minimum contribution increases (D64) | average donations (D64) |
| conditional gifts (D64) | pooling at minimum contribution level (D70) |
| conditional gifts (D64) | crowding out donations (D64) |
| conditional gifts (D64) | effectiveness in screening non-reciprocal types (C52) |