IDEAS home Printed from https://ideas.repec.org/p/crd/wpaper/14002.html
   My bibliography  Save this paper

Why Do People Give? Testing Pure and Impure Altruism

Author

Listed:
  • Mark Ottoni-Wilhelm

    (Indiana University Purdue University-Indianapolis)

  • Lise Vesterlund

    (University of Pittsburgh)

  • Huan Xie

    (Concordia University)

Abstract

The extant experimental design to investigate warm glow and altruism elicits a single measure of crowd-out. Not recognizing that impure altruism predicts crowd-out is a function of giving-by-others, this design's power to reject pure altruism varies with the level of giving-by-others, and it cannot identify the strength of warm glow and altruism preferences. These limitations are addressed with a new design that elicits crowd-out at a low and at a high level of giving-by-others. Consistent with impure altruism we find decreasing crowd-out as giving-by-others increases. However warm glow is weak in our experiment and altruism largely explains why people give.

Suggested Citation

  • Mark Ottoni-Wilhelm & Lise Vesterlund & Huan Xie, 2014. "Why Do People Give? Testing Pure and Impure Altruism," Working Papers 14002, Concordia University, Department of Economics.
    • Handle: RePEc:crd:wpaper:14002
    as

    Download full text from publisher

    File URL: https://sites.google.com/site/huanxie08/research/WhyDoPeopleGive.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Matthias Sutter & Hannelore Weck-Hannemann, 2004. "An Experimental Test of the Public Goods Crowing Out Hypothesis when Taxation Is Endogenous," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 60(1), pages 94-110, April.
    2. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    3. Andreoni, James & Payne, A. Abigail, 2011. "Is crowding out due entirely to fundraising? Evidence from a panel of charities," Journal of Public Economics, Elsevier, vol. 95(5), pages 334-343.
    4. Lorenzo Cappellari & Stephen P. Jenkins, 2006. "Calculation of multivariate normal probabilities by simulation, with applications to maximum simulated likelihood estimation," Stata Journal, StataCorp LP, vol. 6(2), pages 156-189, June.
    5. Chan, Kenneth S. & Godby, Rob & Mestelman, Stuart & Andrew Muller, R., 2002. "Crowding-out voluntary contributions to public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 305-317, July.
    6. Palfrey, Thomas R. & Prisbrey, Jeffrey E., 1996. "Altuism, reputation and noise in linear public goods experiments," Journal of Public Economics, Elsevier, vol. 61(3), pages 409-427, September.
    7. Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September.
    8. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
    9. Andreoni, James, 1993. "An Experimental Test of the Public-Goods Crowding-Out Hypothesis," American Economic Review, American Economic Association, vol. 83(5), pages 1317-1327, December.
    10. Crumpler, Heidi & Grossman, Philip J., 2008. "An experimental test of warm glow giving," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1011-1021, June.
    11. Sugden, Robert, 1982. "On the Economics of Philanthropy," Economic Journal, Royal Economic Society, vol. 92(366), pages 341-350, June.
    12. Palfrey, Thomas R & Prisbrey, Jeffrey E, 1997. "Anomalous Behavior in Public Goods Experiments: How Much and Why?," American Economic Review, American Economic Association, vol. 87(5), pages 829-846, December.
    13. Steinberg, Richard S., 1991. "'Unfair' Competition by Nonprofits and Tax Policy," National Tax Journal, National Tax Association, vol. 44(3), pages 351-64, September.
    14. Steinberg, Richard S., 1991. "'Unfair' Competition by Nonprofits and Tax Policy," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(3), pages 351-364, September.
    15. Alan Sule & Honoré Bo E. & Hu Luojia & Leth-Petersen Søren, 2014. "Estimation of Panel Data Regression Models with Two-Sided Censoring or Truncation," Journal of Econometric Methods, De Gruyter, vol. 3(1), pages 1-20, January.
    16. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 1998. "A theoretical analysis of altruism and decision error in public goods games," Journal of Public Economics, Elsevier, vol. 70(2), pages 297-323, November.
    17. Yaron Azrieli & Christopher P. Chambers & Paul J. Healy, 2018. "Incentives in Experiments: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 126(4), pages 1472-1503.
    18. Khanna, Jyoti & Posnett, John & Sandler, Todd, 1995. "Charity donations in the UK: New evidence based on panel data," Journal of Public Economics, Elsevier, vol. 56(2), pages 257-272, February.
    19. Bolton, Gary E. & Katok, Elena, 1998. "An experimental test of the crowding out hypothesis: The nature of beneficent behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 315-331, November.
    20. David C. Ribar & Mark O. Wilhelm, 2002. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 425-457, April.
    21. Kingma, Bruce Robert, 1989. "An Accurate Measurement of the Crowd-Out Effect, Income Effect, and Price Effect for Charitable Contributions," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1197-1207, October.
    22. Gronberg, Timothy J. & Luccasen, R. Andrew & Turocy, Theodore L. & Van Huyck, John B., 2012. "Are tax-financed contributions to a public good completely crowded-out? Experimental evidence," Journal of Public Economics, Elsevier, vol. 96(7-8), pages 596-603.
    23. Goeree, Jacob K. & Holt, Charles A. & Laury, Susan K., 2002. "Private costs and public benefits: unraveling the effects of altruism and noisy behavior," Journal of Public Economics, Elsevier, vol. 83(2), pages 255-276, February.
    24. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
    25. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    26. 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.
    27. Eckel, Catherine C. & Grossman, Philip J. & Johnston, Rachel M., 2005. "An experimental test of the crowding out hypothesis," Journal of Public Economics, Elsevier, vol. 89(8), pages 1543-1560, August.
    28. Yildirim, Huseyin, 2014. "Andreoni–McGuire algorithm and the limits of warm-glow giving," Journal of Public Economics, Elsevier, vol. 114(C), pages 101-107.
    29. 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 1447-1458, December.
    30. 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 464-477, June.
    31. Mark Ottoni-Wilhelm & Lise Vesterlund & Huan Xie, 2017. "Why Do People Give? Testing Pure and Impure Altruism," American Economic Review, American Economic Association, vol. 107(11), pages 3617-3633, November.
    32. Steinberg, Richard S, 1987. "Voluntary Donations and Public Expenditures in a Federal System," American Economic Review, American Economic Association, vol. 77(1), pages 24-36, March.
    33. Okten, Cagla & Weisbrod, Burton A., 2000. "Determinants of donations in private nonprofit markets," Journal of Public Economics, Elsevier, vol. 75(2), pages 255-272, February.
    34. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
    35. Pablo Branas-Garza & Antonio Cabrales (ed.), 2016. "Experimental Economics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-53816-1.
    36. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arbel, Yuval & Bar-El, Ronen & Schwarz, Mordechai E. & Tobol, Yossef, 2019. "To What Do People Contribute? Ongoing Operations vs. Sustainable Supplies," IZA Discussion Papers 12180, Institute of Labor Economics (IZA).
    2. Korenok, Oleg & Millner, Edward L. & Razzolini, Laura, 2013. "Impure altruism in dictators' giving," Journal of Public Economics, Elsevier, vol. 97(C), pages 1-8.
    3. Yildirim, Huseyin, 2014. "Andreoni–McGuire algorithm and the limits of warm-glow giving," Journal of Public Economics, Elsevier, vol. 114(C), pages 101-107.
    4. Konow, James, 2010. "Mixed feelings: Theories of and evidence on giving," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 279-297, April.
    5. Ferguson, Eamonn & Flynn, Niall, 2016. "Moral relativism as a disconnect between behavioural and experienced warm glow," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 163-175.
    6. Gallier, Carlo & Reif, Christiane & Römer, Daniel, 2014. "Consistent or balanced? On the dynamics of voluntary contributions," ZEW Discussion Papers 14-060, ZEW - Leibniz Centre for European Economic Research.
    7. Crumpler, Heidi & Grossman, Philip J., 2008. "An experimental test of warm glow giving," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1011-1021, June.
    8. Gallier, Carlo & Reif, Christiane & Römer, Daniel, 2017. "Repeated pro-social behavior in the presence of economic interventions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 69(C), pages 18-28.
    9. Lata Gangadharan & Philip J. Grossman & Kristy Jones, 2014. "Deconstructing Giving: Donor Types and How They Give," Monash Economics Working Papers 53-14, Monash University, Department of Economics.
    10. Andreoni, James & Payne, A. Abigail, 2011. "Is crowding out due entirely to fundraising? Evidence from a panel of charities," Journal of Public Economics, Elsevier, vol. 95(5), pages 334-343.
    11. Sonia Manzoor & John Straub, 2005. "The robustness of Kingma’s crowd-out estimate: Evidence from new data on contributions to public radio," Public Choice, Springer, vol. 123(3), pages 463-476, June.
    12. Ekaterina Melnik & Jean-Benoît Zimmermann, 2015. "The We and the I: The Logic of Voluntary Associations," Working Papers halshs-01109609, HAL.
    13. Gronberg, Timothy J. & Luccasen, R. Andrew & Turocy, Theodore L. & Van Huyck, John B., 2012. "Are tax-financed contributions to a public good completely crowded-out? Experimental evidence," Journal of Public Economics, Elsevier, vol. 96(7-8), pages 596-603.
    14. Gandullia, Luca & Lezzi, Emanuela & Parciasepe, Paolo, 2020. "Replication with MTurk of the experimental design by Gangadharan, Grossman, Jones & Leister (2018): Charitable giving across donor types," Journal of Economic Psychology, Elsevier, vol. 78(C).
    15. Bolton, Gary E. & Katok, Elena, 1998. "An experimental test of the crowding out hypothesis: The nature of beneficent behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 315-331, November.
    16. James Andreoni & Abigail Payne, 2007. "Crowding out Both Sides of the Philanthropy Market: Evidence from a Panel of Charities," Levine's Bibliography 122247000000001769, UCLA Department of Economics.
    17. Becker, Gary S. & Elias, Julio Jorge & Ye, Karen J., 2022. "The shortage of kidneys for transplant: Altruism, exchanges, opt in vs. opt out, and the market for kidneys," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 211-226.
    18. Eckel, Catherine C. & Grossman, Philip J. & Johnston, Rachel M., 2005. "An experimental test of the crowding out hypothesis," Journal of Public Economics, Elsevier, vol. 89(8), pages 1543-1560, August.
    19. Paskalev, Zdravko & Yildirim, Huseyin, 2017. "A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 1-18.
    20. Lionel Richefort, 2018. "Warm-glow giving in networks with multiple public goods," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1211-1238, November.

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crd:wpaper:14002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Economics Department (email available below). General contact details of provider: https://edirc.repec.org/data/deconca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.