Altruism & Social Pressure

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Presentation transcript:

Altruism & Social Pressure Testing for altruism and social pressure in charitable giving DellaVigna, List, Malmendier 2009 Janina Pehws

Overview Introduction Model Experimental design Hypothesis Results Conclusion Janina Pehws Experimental and Behavioral Economics 06.06.2016 2

Introduction Janina Pehws Experimental and Behavioral Economics 06.06.2016 3

Introduction Two motivations for giving: altruism/ warm glow social pressure Altruism: donate, because they care about a specific worthy case Warm glow: donate, because they enjoy the feeling of giving Social pressure: donate, because they dislike to be seen as not giving (would prefer not to give) Janina Pehws Experimental and Behavioral Economics 06.06.2016 4

Introduction Model + Field Experiment Test for 2 types of motivations  which of the models fits observations better (with or without social pressure) Test for the welfare effect of donating Is donating welfare enhancing? Janina Pehws Experimental and Behavioral Economics 06.06.2016 5

Model Utility maximization: s: Social pressure cost (of not giving/giving small amounts) No social pressure  S=0 Janina Pehws Experimental and Behavioral Economics 06.06.2016 6

Experimental design Field experiment: Door-to-door fund-raising Treatments: charity treatment (ask for donation): 7,669 households Survey treatment (ask questions about charitable giving): 1,866 households Janina Pehws Experimental and Behavioral Economics 06.06.2016 7

Experimental design Treatments: Baseline: just knock/ring bell Flyer: visit is announced a day before Opt-out: flyer includes box, if box is checked  solicitors do not knock on the door Janina Pehws Experimental and Behavioral Economics 06.06.2016 8

Hypothesis Hypothesis:  Giving would be welfare enhancing If people give due to altruism, flyer should increase presence at home and giving (or give through other means)  Giving would be welfare enhancing Janina Pehws Experimental and Behavioral Economics 06.06.2016 9

Results Results from OLS Regression: Flyer: Reduces Probability of opening the door by 10% BUT: Giving is higher (sorting in of altruists) Opt-out : Reduces Probability of opening the door by 25% BUT: - Number of large donations increases - social pressure cost is reduced Janina Pehws Experimental and Behavioral Economics 06.06.2016 10

Results Results from OLS Regression: Some give due to altruism (> $10) some give due to social pressure (< $10) Median amount given: $10 Donation due to altruism: large donations (> $10) Donation due to social pressure: small donations (< $10) stronger evidence for role of social pressure: ½ of donators would prefer not to give (not to be contacted)  they opt out, when they can (and don´t give through other means) Janina Pehws Experimental and Behavioral Economics 06.06.2016 11

Results Janina Pehws Experimental and Behavioral Economics 06.06.2016 12

Results Results from minimum-distance estimator: Social pressure cost: $3.5 (local charity) Unsolicited Fundraising is welfare decreasing (for giver) local charity: welfare (giver) − $1.04 / welfare (net) + $0.35 Hypothesis rejected With S=0 the model cannot explain opting out Janina Pehws Experimental and Behavioral Economics 06.06.2016 13

Conclusion Both Altruism and social pressure play a role in charitable giving Negative welfare effect (because of social pressure costs) Solution: Flyer Opt-out  Win-win for charity & households Janina Pehws Experimental and Behavioral Economics 06.06.2016 14

Thank you for your attention! Do you have any questions?? Janina Pehws Experimental and Behavioral Economics 06.06.2016 15