“Give less but give smart”: Experimental evidence on the effects of public information about quality on giving

Luigi Butera and Jeffrey Horn ()

Journal of Economic Behavior & Organization, 2020, vol. 171, issue C, 59-76

Abstract: We conduct a laboratory experiment to test how information about charities’ qualities and its public visibility affect giving. We first show theoretically that a perceived increase in charities’ qualities represents a decrease in the price of charitable output, which could generate both an income and substitution effect on nominal giving. On the one hand positive news about charities’ qualities can increase giving, since donors realize that it is cheaper to generate charitable output. On the other hand positive news can reduce nominal giving because a smaller donation can generate an equal or higher level of charitable output. We then hypothesize and test that such negative income effect may be dominant among image-motivated donors whenever the quality of giving has a social signaling value: donors can “give less, but show that they give smart”. We find that when information is public, 34% of donors trade-off the quality and quantity of their donations. We show that these donors are relatively more motivated by social recognition, and strategically use positive public information to give less. The effect of public information is causal: when information about charities’ qualities is privately received, giving is always increasing in the quality of the news, and bad news has no effect on giving.

Keywords: Charitable giving; Quality and giving; Information; Income and substitution effects; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D64 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268120300056
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:171:y:2020:i:c:p:59-76

DOI: 10.1016/j.jebo.2020.01.011

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().