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The Effect of Status on Charitable Giving

Cagri Kumru () and Lise Vesterlund ()

Journal of Public Economic Theory, 2010, vol. 12, issue 4, 709-735

Abstract: Fundraisers often start their campaigns by soliciting the wealthier, more recognized, and respected individuals in a community. We examine whether the success of this solicitation ordering in part can be attributed to the fact that it enables individuals to select organizations that have a high‐status donor base. Assuming that individuals prefer to associate with individuals of higher social ranking we use a simple linear model to show that both aggregate donations and earnings are larger when high‐status donors are solicited first. We investigate the predicted comparative statics using the experimental laboratory. Inducing a status differential we reverse the contribution ordering between participants of high and low status. Consistent with current fundraising practice, we find that low‐status followers are likely to mimic donations by high‐status leaders and this encourages high‐status leaders to give. Donations are therefore larger when individuals of high status give before rather than after those of low status.

Date: 2010
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Handle: RePEc:bla:jpbect:v:12:y:2010:i:4:p:709-735