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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 () (Justus Liebig University Gießen, Faculty of Business Administration and Economics)
Günther G. Schulze () (Albert Ludwigs University Freiburg, Institute for Economic Research, Department of International Economic Policy)

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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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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/02-2008_koppel.pdf
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Publisher Info
Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200802.

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Length: 21 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:mar:magkse:200802

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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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  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)
  2. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-35, May. [Downloadable!] (restricted)
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  4. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
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  6. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, 09. [Downloadable!] (restricted)
  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)
  11. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August. [Downloadable!] (restricted)
  12. Soetevent, Adriaan R., 2005. "Anonymity in giving in a natural context--a field experiment in 30 churches," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2301-2323, December. [Downloadable!] (restricted)
  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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