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The price elasticity of charitable giving: New experimental evidence

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  • Gandullia, Luca
  • Lezzi, Emanuela

Abstract

We examine the charitable giving decisions of donors under two subsidy mechanisms, rebate and matching, and we calculate the price elasticity of giving. We implement an online survey using the Amazon Mechanical Turk platform. Participants are asked to make a series of allocation decisions between themselves and a charity of their choice. We vary endowment and subsidy rates in line with the literature. The results show that contributions under matching subsidies are significantly higher than contributions under rebate subsidies. Participants who usually make a donation are more likely to give and are less responsive to price changes. Moreover, the probability of giving increases monotonically along with subsidy rates.

Suggested Citation

  • Gandullia, Luca & Lezzi, Emanuela, 2018. "The price elasticity of charitable giving: New experimental evidence," Economics Letters, Elsevier, vol. 173(C), pages 88-91.
    • Handle: RePEc:eee:ecolet:v:173:y:2018:i:c:p:88-91
    DOI: 10.1016/j.econlet.2018.09.012
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    References listed on IDEAS

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    1. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 351-362, June.
    2. Douglas D. Davis & Edward L. Millner, 2005. "Rebates, Matches, and Consumer Behavior," Southern Economic Journal, John Wiley & Sons, vol. 72(2), pages 410-421, October.
    3. Kimberley Scharf & Sarah Smith, 2015. "The price elasticity of charitable giving: does the form of tax relief matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(2), pages 330-352, April.
    4. Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.
    5. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    6. Blumenthal, Marsha & Kalambokidis, Laura & Turk, Alex, 2012. "Subsidizing Charitable Contributions With a Match Instead of a Deduction: What Happens to Donations and Compliance?," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 91-116, March.
    7. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Giving with Rebates or Matching: Further Laboratory Evidence," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 794-807, April.
    8. Catherine Eckel & Philip Grossman, 2008. "Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 234-252, September.
    9. repec:cup:judgdm:v:5:y:2010:i:5:p:411-419 is not listed on IDEAS
    10. Eckel, Catherine & Grossman, Philip J., 2017. "Comparing rebate and matching subsidies controlling for donors’ awareness: Evidence from the field," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 88-95.
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    Citations

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    Cited by:

    1. Feine, Gregor & Groh, Elke D. & von Loessl, Victor & Wetzel, Heike, 2023. "The double dividend of social information in charitable giving: Evidence from a framed field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).
    2. Ben Grodeck & Philipp Schoenegger, 2022. "Demanding the Morally Demanding: Experimental Evidence on the Effects of Moral Arguments and Moral Demandingness on Charitable Giving," Monash Economics Working Papers 2022-03, Monash University, Department of Economics.
    3. 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).
    4. Johannes Diederich & Catherine C. Eckel & Raphael Epperson & Timo Goeschl & Philip J. Grossman, 2022. "Subsidizing unit donations: matches, rebates, and discounts compared," Experimental Economics, Springer;Economic Science Association, vol. 25(2), pages 734-758, April.
    5. Ben Grodeck & Philip J. Grossman, 2022. "Thumbs Down for the Thumbs Up Emoji: Experimental Evidence on the Impact of Instantaneous Positive Reinforcement on Charitable Giving," Monash Economics Working Papers 2022-01, Monash University, Department of Economics.
    6. Grodeck, Ben & Schoenegger, Philipp, 2023. "Demanding the morally demanding: Experimental evidence on the effects of moral arguments and moral demandingness on charitable giving," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).

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    More about this item

    Keywords

    Charitable giving; Subsidies; Intensive elasticity; Extensive elasticity; Online experiments;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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