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Warm glow and charitable giving: Why the wealthy do not give more to charity?

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Author Info

  • Mayo, John W.
  • Tinsley, Catherine H.

Abstract

Attempts to understand the economic and psychological motivations for charitable giving date at least back to Adam Smith (1759). In his Theory of Moral Sentiments, Smith attempts to explain why and how an individual or household will feel sympathy for other less well-off individuals or households. At the heart of Smith's analysis is the general proposition that sympathy (and presumably discernible actions based on that sympathy) is embodied in the ability of an individual to imagine, from his own perspective, the plight of the less well-off household. In this paper we posit a model of charitable giving that is predicated on this basic proposition that we believe lies at the center of explaining the pattern of charitable giving in the United States. In particular, we suggest that understanding the fundamental human and economic drivers of giving requires us to consider the nature and determinants of the "warm glow" a household experiences when making charitable donations to other households. We borrow from cognitive psychologists' research into how people judge reward distributions and infer causality of such distributions to explain when households are more and less likely to experience this warm glow. Specifically, we explain how biased perceptions of effort and luck, as the causes of reward distributions, will systematically reduce warm glow of high-income households, which may help explain the essentially flat relationship between income and percentage donations to charity.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 30 (2009)
Issue (Month): 3 (June)
Pages: 490-499

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Handle: RePEc:eee:joepsy:v:30:y:2009:i:3:p:490-499

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Altruism Warmglow Giving;

References

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  1. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  2. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
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  5. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
  6. Thomas R. Palfrey & Jeffrey Prisbrey, 2010. "Anomalous Behavior in Public Goods Experiments: How Much and Why?," Levine's Working Paper Archive 1380, David K. Levine.
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  8. repec:att:wimass:9309 is not listed on IDEAS
  9. Coate, Stephen, 1995. "Altruism, the Samaritan's Dilemma, and Government Transfer Policy," American Economic Review, American Economic Association, vol. 85(1), pages 46-57, March.
  10. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  11. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
  12. Bernheim, B Douglas, 1986. "On the Voluntary and Involuntary Provision of Public Goods," American Economic Review, American Economic Association, vol. 76(4), pages 789-93, September.
  13. Andreoni, James, 1995. "Cooperation in Public-Goods Experiments: Kindness or Confusion?," American Economic Review, American Economic Association, vol. 85(4), pages 891-904, September.
  14. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
  15. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
  16. Harbaugh, William T, 1998. "The Prestige Motive for Making Charitable Transfers," American Economic Review, American Economic Association, vol. 88(2), pages 277-82, May.
  17. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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Cited by:
  1. Ambrose Leung & Cheryl Kier & Tak Fung & Linda Fung & Robert Sproule, 2011. "Searching for Happiness: The Importance of Social Capital," Journal of Happiness Studies, Springer, vol. 12(3), pages 443-462, June.
  2. Mirco Tonin & Michael Vlassopoulos, 2013. "Sharing One's Fortune? An Experimental Study on Earned Income and Giving," CESifo Working Paper Series 4475, CESifo Group Munich.
  3. Andrés Rodriguez-Pose & Viola von Berlepsch, 2012. "Social Capital and Individual Happiness in Europe," Bruges European Economic Research Papers 25, European Economic Studies Department, College of Europe.

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