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Comparing rebate and matching subsidies controlling for donors’ awareness: Evidence from the field

Catherine Eckel () and Philip Grossman ()

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2017, vol. 66, issue C, 88-95

Abstract: This paper compares the effectiveness of rebate and matching subsidies in the field and, to our knowledge, is the first to control for potential bias introduced by the failure to account for donors’ awareness of the offered subsidies. Where previous field experiments have typically been limited to either rebate subsidies or matching subsidies, we study both types and determine whether donors are aware of any offered subsidy. We provide evidence that this methodological shortcoming (i.e., the loss of control) is not trivial. Our findings suggest the assumption in earlier field studies, that the offered price is equal to the perceived or actual price, is likely incorrect and may result in underestimation of the price elasticities of giving. This set of results has strong implications for the design of effective subsidies in a variety of decision settings. In addition, our results serve to validate the lab studies’ finding that matching subsidies are more powerful than rebate subsidies of equivalent cost at increasing total giving to charities.

Keywords: Charitable giving; Field experiment; Subsidies (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:soceco:v:66:y:2017:i:c:p:88-95