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

Hannes Koppel and Günther Schulze

No 2, Discussion Paper Series from Department of International Economic Policy, University of 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’.

Keywords: Tied transfers; donations; charity; efficiency versus effectiveness; ‘fair trade’ (search for similar items in EconPapers)
JEL-codes: C93 D63 D64 H21 H41 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2008-02, Revised 2008-03
New Economics Papers: this item is included in nep-exp
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Working Paper: Inefficient but Effective? A field experiment on the effectiveness of direct and indirect transfer mechanisms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:fre:wpaper:2

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