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Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment

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Author Info
Dean Karlan
John A. List

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Abstract

We conducted a natural field experiment to further our understanding of the economics of charity. Using direct mail solicitations to over 50,000 prior donors of a nonprofit organization, we tested the effectiveness of a matching grant on charitable giving. We find that the match offer increases both the revenue per solicitation and the response rate. Larger match ratios (i.e., $3:$1 and $2:$1) relative to a smaller match ratio ($1:$1) had no additional impact, however. The results provide avenues for future empirical and theoretical work on charitable giving, cost-benefit analysis, and the private provision of public goods. (JEL D64, L31)

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File URL: http://hdl.handle.net/10.1257/aer.97.5.1774
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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 97 (2007)
Issue (Month): 5 (December)
Pages: 1774-1793
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Handle: RePEc:aea:aecrev:v:97:y:2007:i:5:p:1774-1793

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February. [Downloadable!] (restricted)
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  2. Lankford, Hamilton & Wyckoff, James, 1992. "Primary and secondary school choice among public and religious alternatives," Economics of Education Review, Elsevier, vol. 11(4), pages 317-337, December. [Downloadable!] (restricted)
  3. Laffont, Jean-Jacques, 1975. "Macroeconomic Constraints, Economic Efficiency and Ethics: An Introduction to Kantian Economics," Economica, London School of Economics and Political Science, vol. 42(168), pages 430-37, November. [Downloadable!] (restricted)
  4. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March. [Downloadable!] (restricted)
  5. David C. Ribar & Mark O. Wilhelm, 2002. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 425-457, April. [Downloadable!] (restricted)
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  6. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January. [Downloadable!] (restricted)
  7. Kingma, Bruce Robert, 1989. "An Accurate Measurement of the Crowd-Out Effect, Income Effect, and Price Effect for Charitable Contributions," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1197-1207, October. [Downloadable!] (restricted)
  8. Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2006. "Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 747-782, May. [Downloadable!] (restricted)
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  9. Steinberg, Richard S, 1987. "Voluntary Donations and Public Expenditures in a Federal System," American Economic Review, American Economic Association, vol. 77(1), pages 24-36, March.
  10. Sugden, Robert, 1984. "Reciprocity: The Supply of Public Goods through Voluntary Contributions," Economic Journal, Royal Economic Society, vol. 94(376), pages 772-87, December. [Downloadable!] (restricted)
  11. Randolph, William C, 1995. "Dynamic Income, Progressive Taxes, and the Timing of Charitable Contributions," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 709-38, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daniel Rondeau & John A. List, 2008. "Matching and Challenge Gifts to Charity:Evidence from Laboratory and Natural Field Experiments," NBER Working Papers 13728, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Goette, Lorenz & Stutzer, Alois, 2008. "Blood Donations and Incentives: Evidence from a Field Experiment," IZA Discussion Papers 3580, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Linardi, Sera & McConnell, Margaret A., 2008. "Volunteering and image concerns," Working Papers 1282, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  4. Hahn, Jinyong & Hirano, Keisuke & Karlan, Dean, 2008. "Adaptive Experimental Design Using the Propensity Score," MPRA Paper 8315, University Library of Munich, Germany. [Downloadable!]
  5. Jeffrey R. Kling, 2007. "Methodological Frontiers of Public Finance Field Experiments," NBER Working Papers 12931, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. List, John A. & Reiley, David, 2008. "Field Experiments in Economics: Palgrave Entry," IZA Discussion Papers 3273, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Jon Bakija & Bradley Heim, 2008. "How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation," NBER Working Papers 14237, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Ronald J. Baker II & James M. Walker & Arlington W. Williams, 2006. "Matching Contributions and the Voluntary Provision of a Pure Public Good: Experimental Evidence," Caepr Working Papers 2006-007, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington, revised Dec 2007. [Downloadable!]
  9. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies," Working Papers 2008-08 Classification-C9, Saint Cloud State University, Department of Economics, revised Dec 2007. [Downloadable!]
  10. Jason Henderson, 2008. "What is driving food price inflation?," Main Street Economist, Federal Reserve Bank of Kansas City. [Downloadable!]
  11. Stephan Meier, 2006. "Do subsidies increase charitable giving in the long run?: matching donations in a field experiment," Working Papers 06-18, Federal Reserve Bank of Boston. [Downloadable!]
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  12. Douglas D. Davis, 2006. "Rebate Subsidies, Matching Subsidies and Isolation Effects," Working Papers 0604, VCU School of Business, Department of Economics. [Downloadable!]
    Other versions:
  13. Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2008. "Is a Donor in Hand Better than Two in the Bush? Evidence from a Natural Field Experiment," NBER Working Papers 14319, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Nava Ashraf & James Berry & Jesse M. Shapiro, 2007. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," NBER Working Papers 13247, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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