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WP #: 013

Date: Dec 2014


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Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment

     This paper was published in The Quarterly Journal of Economics in 2005

    Craig E. Landry, Andreas Lange, John A. List, Michael K. Price, Nicholas G. Rupp

    East Carolina University
    University of Maryland
    University of Chicago, NBER
    University of Nevada, Reno
    East Carolina University


Abstract:
This study develops theory and uses a door-to-door fundraising field experiment to explore the economics of charity. We approached nearly 5000 households, randomly divided into four experimental treatments, to shed light on key issues on the demand side of charitable fundraising. Empirical results are in line with our theory: in gross terms, our lottery treatments raised considerably more money than our voluntary contributions treatments. Interestingly, we find that a one standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive¬°athe magnitude of the estimated difference in gifts is roughly equivalent to the treatment effect of moving from our theoretically most attractive approach (lotteries) to our least attractive approach (voluntary contributions).


SPI Quick Look:
This study develops theory and uses a door-to-door fundraising field experiment to explore the economics of charity. Nearly 5000 households are approached, randomly divided into four experimental treatments, to shed light on key issues on the demand side of charitable fundraising. The paper explores voluntary contributions, charitable lotteries, and seed money. Results show that lottery treatments raised considerably more money than the voluntary contributions treatments. Results also show that a one standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive. The magnitude of the estimated difference in gifts is roughly equivalent to the treatment effect of moving from the theoretically most attractive approach (lotteries) to the least attractive approach (voluntary contributions).