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Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid

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  • Jonathan Meer

    (Texas A&M University)

  • Harvey S. Rosen

    (Princeton University)

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    Abstract

    We investigate how undergraduates’ financial aid packages affect their subsequent dona-tive behavior as alumni. The empirical work is based upon a rich set of micro data on alumni giving at an anonymous research university, which we call Anon U. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly. Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. Further, individuals who take out large loans make smaller con-tributions as alumni, conditional on making a gift. This effect is unlikely to be due to the fact that repaying the loan reduces the alumnus’s capacity to give. We conjecture that, rather, it is caused by an “annoyance effect” — alumni resent the fact that they are burdened with loans. 2) Scholar-ship aid reduces the size of a gift, conditional on making a gift, but has little effect on the proba-bility of making a donation. Students who received scholarships are also less likely to be in the top 10 percent of givers in their class in a given year. The negative effect of receiving a scholar-ship on the amount donated decreases in absolute value with the size of the scholarship. Again, we do not find any evidence of income effects, i.e., that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.

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    Bibliographic Info

    Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1361.

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    Date of creation: Oct 2011
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    Handle: RePEc:pri:cepsud:224rosen

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    Related research

    Keywords: alumni; donations; financial aid; college;

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    References

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    1. Andreoni,J. & Vesterlund,L., 1998. "Which is the fair sex? : Gender differences in altruism," Working papers 10, Wisconsin Madison - Social Systems.
    2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    3. Huck, Steffen & Rasul, Imran & Shephard, Andrew, 2013. "Comparing Charitable Fundraising Schemes: Evidence from a Natural Field Experiment and a Structural Model," CEPR Discussion Papers 9648, C.E.P.R. Discussion Papers.
    4. Clotfelter, C. T., 2003. "Alumni giving to elite private colleges and universities," Economics of Education Review, Elsevier, vol. 22(2), pages 109-120, April.
    5. Leung, S.F. & Yu, S., 1992. "On the Choice Between Sample Selection and Two-Part Models," RCER Working Papers 337, University of Rochester - Center for Economic Research (RCER).
    6. Holmes, Jessica, 2009. "Prestige, charitable deductions and other determinants of alumni giving: Evidence from a highly selective liberal arts college," Economics of Education Review, Elsevier, vol. 28(1), pages 18-28, February.
    7. Jonathan Meer & Harvey S. Rosen, 2008. "The Impact of Athletic Performance on Alumni Giving: An Analysis of Micro Data," NBER Working Papers 13937, National Bureau of Economic Research, Inc.
    8. Brendan M. Cunningham & Carlena K. Cochi-Ficano, 2002. "The Determinants of Donative Revenue Flows from Alumni of Higher Education: An Empirical Inquiry," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 540-569.
    9. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, 09.
    10. Ronald G. Ehrenberg & Christopher L. Smith, 2001. "The Sources and Uses of Annual Giving at Private Research Universities," NBER Working Papers 8307, National Bureau of Economic Research, Inc.
    11. Monks, James, 2003. "Patterns of giving to one's alma mater among young graduates from selective institutions," Economics of Education Review, Elsevier, vol. 22(2), pages 121-130, April.
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