Working Paper: NBER ID: w19066
Authors: Alexander L. Brown; Jonathan Meer; J. Forrest Williams
Abstract: Why do individuals volunteer their time even when recipients receive far less value than the donor's opportunity cost? Previous models of altruism that focus on the overall impact of a gift cannot rationalize this behavior, despite its prevalence. We develop a model that relaxes this assumption, al- lowing for differential warm glow depending on the form of the donation. In a series of laboratory experiments that control for other aspects of volunteering, such as its signaling value, subjects demonstrate behavior consistent with the theoretical assumption that gifts of time produce greater utility than the same transfers in the form of money. Subjects perform an effort task, accruing earnings at potentially different wage rates for themselves or a charity of their choice, with the ability to transfer any of their personal earnings to charity at the end of the experiment. Subjects exhibit strong preferences for donating time even when differential wage rates make it costly to do so. The results provide new insights on the nature of volunteering and gift-giving.
Keywords: volunteering; charitable giving; warm glow; experimental economics
JEL Codes: D64; H41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| donating time (D64) | utility derived from donating time (D64) |
| donating money (D64) | utility derived from donating money (D64) |
| warm glow effect (Y60) | charitable behavior (D64) |
| act of volunteering (D64) | psychological benefits (D91) |
| utility derived from time donations (J29) | utility derived from monetary donations (D64) |
| donating time (D64) | likelihood of donating time (D64) |
| donating money (D64) | likelihood of donating money (D64) |