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The Effect of Status on Charitable Giving

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  • CAGRI S. KUMRU
  • LISE VESTERLUND

Abstract

Fundraisers often start their campaigns by soliciting the wealthier, more recognized, and respected individuals in a community. We examine whether the success of this solicitation ordering in part can be attributed to the fact that it enables individuals to select organizations that have a high-status donor base. Assuming that individuals prefer to associate with individuals of higher social ranking we use a simple linear model to show that both aggregate donations and earnings are larger when high-status donors are solicited first. We investigate the predicted comparative statics using the experimental laboratory. Inducing a status differential we reverse the contribution ordering between participants of high and low status. Consistent with current fundraising practice, we find that low-status followers are likely to mimic donations by high-status leaders and this encourages high-status leaders to give. Donations are therefore larger when individuals of high status give before rather than after those of low status. Copyright © 2010 Wiley Periodicals, Inc..

Suggested Citation

  • Cagri S. Kumru & Lise Vesterlund, 2010. "The Effect of Status on Charitable Giving," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(4), pages 709-735, August.
  • Handle: RePEc:bla:jpbect:v:12:y:2010:i:4:p:709-735
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