Income, Charitable Giving, and Perception Bias

Kun Su and Rui Wan

Prague Economic Papers, 2018, vol. 2018, issue 1, 40-54

Abstract: This paper analyses income and charitable giving from the perspective of perception bias. We show that perception bias affects charitable giving through its effects on warm glow, while inequality aversion counteracts these effects. Donors' perception bias regarding a recipient's situation does not necessarily decrease their charitable giving. Specifically, perception bias regarding the recipients' effort and life shock decreases donors' charitable giving. Perception bias regarding the recipients' ability decreases donors' giving to charities designed to help low-ability recipients but increases their giving to charities designed to help high-ability recipients. We also show that perception bias increases with donors' income. Fundraising professionals shall allocate more efforts to those who do not care about inequality that much when correcting the donors' perception bias; focus their efforts on correcting the donors' perception bias, especially for rich donors, when raising money for charities with low-ability recipients; but increase donors' perception bias regarding the recipients' ability when raising money for charities with high-ability recipients.

Keywords: charitable giving; inequality aversion; perception bias; warm glow (search for similar items in EconPapers)
JEL-codes: D63 D64 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://pep.vse.cz/doi/10.18267/j.pep.637.html (text/html)
http://pep.vse.cz/doi/10.18267/j.pep.637.pdf (application/pdf)
free of charge

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:prg:jnlpep:v:2018:y:2018:i:1:id:637:p:40-54

Ordering information: This journal article can be ordered from
Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
http://pep.vse.cz

DOI: 10.18267/j.pep.637

Access Statistics for this article

Prague Economic Papers is currently edited by Klára Pavlová

More articles in Prague Economic Papers from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().