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Inefficient but Effective? A field experiment on the effectiveness of direct and indirect transfer mechanisms

Author

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  • Hannes Koppel

    (Justus Liebig University Gießen)

  • Günther G. Schulze

    (Albert Ludwigs University Freiburg)

Abstract

We conduct a field experiment on direct and indirect transfer mechanisms. It shows that people are willing to donate significantly more if the donation is indirect, i.e., it is tied to the purchase of a good with a price premium, rather than made directly. This points to an efficiency–effectiveness trade–off: even though indirect donations are less efficient than direct donations, they are more effective in mobilizing resources. Our findings hold for ‘Fair Trade’ coffee as well as for ‘normal’ coffee. However, the strength of the efficiency–effectiveness trade–off is higher in the case of ‘Fair Trade’.

Suggested Citation

  • Hannes Koppel & Günther G. Schulze, 2008. "Inefficient but Effective? A field experiment on the effectiveness of direct and indirect transfer mechanisms," MAGKS Papers on Economics 200802, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:200802
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    More about this item

    Keywords

    Tied transfers; donations; charity; efficiency versus effectiveness; ‘fair trade’;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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