Testing Motives for Charitable Giving: A Revealed-Preference Methodology with Experimental Evidence

Rahul Deb, Robert Gazzale and Matthew Kotchen

No 18029, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A large economics literature seeks to understand the reasons why individuals make charitable contributions. Fundamental features of most models of charitable giving are the inclusion of externalities induced by other agents and the Lancasterian characteristics approach to specifying utility functions. This paper develops a general, revealed-preference methodology for testing a variety of preference structures that allow for both externalities and characteristics. The tests are simple linear programs that are transparent, computationally efficient, and straightforward to implement. We show how the technique applies to standard models of privately provided public goods and novel models that account for social comparisons based on relative consumption and donations among individuals. We also conduct an original experiment that enables nonparametric tests of many models on a single data set. The results provide the first revealed-preference evidence on the importance of social comparisons when individuals make charitable contributions. Models that include preferences for either relative consumption or donations yield greater explanatory power than the standard model of impure altruism.

JEL-codes: C91 D01 D64 H41 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-evo and nep-exp
Note: EEE PE
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Citations: View citations in EconPapers (3)

Published as Deb, Rahul & Gazzale, Robert S. & Kotchen, Matthew J., 2014. "Testing motives for charitable giving: A revealed-preference methodology with experimental evidence," Journal of Public Economics, Elsevier, vol. 120(C), pages 181-192.

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Journal Article: Testing motives for charitable giving: A revealed-preference methodology with experimental evidence (2014)
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