Defense theory of diversified giving

post by KatjaGrace · 2012-02-25T04:26:00.000Z · LW · GW · 0 comments

People  tend to give small amounts of money to many charities instead of a lot to one favorite charity.  It has been noted that this is irrational behaviour, assuming one cares mainly about the recipients. It is rational though for people who are purchasing ‘warm fuzzy feelings’ or signals of charitableness. So those are the usual explanations.

This nice experiment, via marginal revolution, suggests another explanation:

Every year, 90% of Americans give money to charities. Is such generosity necessarily welfare enhancing for the giver? We present a theoretical framework that distinguishes two types of motivation: individuals like to give, for example, due to altruism or warm glow, and individuals would rather not give but dislike saying no, for example, due to social pressure. We design a door-to-door fund-raiser in which some households are informed about the exact time of solicitation with a flyer on their doorknobs. Thus, they can seek or avoid the fund-raiser. We find that the flyer reduces the share of households opening the door by 9% to 25% and, if the flyer allows checking a Do Not Disturb box, reduces giving by 28% to 42%. The latter decrease is concentrated among donations smaller than $10. These findings suggest that social pressure is an important determinant of door-to-door giving. Combining data from this and a complementary field experiment, we structurally estimate the model. The estimated social pressure cost of saying no to a solicitor is $3.80 for an in-state charity and $1.40 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower the utility of the potential donors.

Assuming that it is more costly to refuse to give the first dollar than the second, and so on, people give to a lot of charities because they are purchasing ease from social pressure (or whatever you want to call this), and a lot of charities are attacking then with social pressure.

I think this explains some of the trend, but not near all. However I haven’t seen the data for how distributed giving is just on occasions that people seek out charities.

Maybe the campaign for efficient charity can have some effect on this section of givers. It provides a convincing excuse. I don’t feel so bad declining those who solicit donations when I can claim that as soon as they make the top of Giving What We Can or Givewell’s lists I will be morally permitted to consider them. Users of this excuse need not actually donate anything to better charities however.

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There should be more links, but I’m typing on a phone. Turns out to be less awkward than I imagined, except adding links.

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