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Inefficient but effective? A field experiment on the effectiveness of direct and indirect transfer mechanisms

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Author Info
Hannes Koppel
Günther G. Schulze () (Department of International Economic Policy, University of Freiburg)

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Abstract

We conduct a field experiment on direct and indirect transfer mechanisms. It shows that people are willing to donate significantly more if the donation is indirect, i.e., it is tied to the purchase of a good with a price premium, rather than made directly. This points to an efficiency–effectiveness trade–off: even though indirect donations are less efficient than direct donations, they are more effective in mobilizing resources. Our findings hold for ‘Fair Trade’ coffee as well as for ‘normal’ coffee. However, the strength of the efficiency–effectiveness trade–off is higher in the case of ‘Fair Trade’.

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Publisher Info
Paper provided by Department of International Economic Policy, University of Freiburg in its series Discussion Paper Series with number 2.

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Length: 22 pages
Date of creation: Feb 2008
Date of revision: Mar 2008
Handle: RePEc:fre:wpaper:2

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Related research
Keywords: Tied transfers; donations; charity; efficiency versus effectiveness; ‘fair trade’;

Other versions of this item:

Find related papers by JEL classification:
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D64 - Microeconomics - - Welfare Economics - - - Altruism
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December. [Downloadable!] (restricted)
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  7. Yen, Steven T, 2002. "An Econometric Analysis of Household Donations in the USA," Applied Economics Letters, Taylor and Francis Journals, vol. 9(13), pages 837-41, October. [Downloadable!] (restricted)
  8. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-60, June. [Downloadable!] (restricted)
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  10. Schokkaert, Erik, 2006. "The Empirical Analysis of Transfer Motives," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier. [Downloadable!] (restricted)
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  13. LeClair, Mark S., 2002. "Fighting the Tide: Alternative Trade Organizations in the Era of Global Free Trade," World Development, Elsevier, vol. 30(6), pages 949-958, June. [Downloadable!] (restricted)
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