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(Un)Informed charitable giving

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  • Krasteva, Silvana
  • Yildirim, Huseyin

Abstract

Evidence suggests little informed giving. To understand this behavior, we examine voluntary provision of a discrete public good with independent private values that can be ascertained at a cost. We find that an individual who considers a smaller contribution is less likely to learn her value, and thus the percentage of informed giving diminishes as the population grows. We also find that a direct grant to the charity exacerbates crowding-out by discouraging information acquisition whereas a matching grant increases donations by encouraging it. We further show that with costly information, a (first-order) stochastic increase in values can decrease donations; and that facilitating private acquisition of information can be a better fund-raising strategy than directly supplying it.

Suggested Citation

  • Krasteva, Silvana & Yildirim, Huseyin, 2013. "(Un)Informed charitable giving," Journal of Public Economics, Elsevier, vol. 106(C), pages 14-26.
  • Handle: RePEc:eee:pubeco:v:106:y:2013:i:c:p:14-26
    DOI: 10.1016/j.jpubeco.2013.06.011
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    Cited by:

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    2. Krasteva, Silvana & Yildirim, Huseyin, 2016. "Information, competition, and the quality of charities," Journal of Public Economics, Elsevier, vol. 144(C), pages 64-77.
    3. Paskalev, Zdravko & Yildirim, Huseyin, 2017. "A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 1-18.
    4. Billur Aksoy & Silvana Krasteva, 2020. "When does less information translate into more giving to public goods?," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1148-1177, December.
    5. Krasteva, Silvana & Saboury, Piruz, 2021. "Informative fundraising: The signaling value of seed money and matching gifts," Journal of Public Economics, Elsevier, vol. 203(C).
    6. Adena, Maja & Alizade, Jeyhun & Bohner, Frauke & Harke, Julian & Mesters, Fabio, 2019. "Quality certification for nonprofits, charitable giving, and donor's trust: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 75-100.
    7. Diederich, Johannes & Goeschl, Timo, 2017. "To mitigate or not to mitigate: The price elasticity of pro-environmental behavior," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 209-222.
    8. Karlan, Dean & List, John A., 2020. "How can Bill and Melinda Gates increase other people's donations to fund public goods?," Journal of Public Economics, Elsevier, vol. 191(C).
    9. Johannes Diederich & Timo Goeschl, 2013. "To Give or Not to Give: The Price of Contributing and the Provision of Public Goods," NBER Working Papers 19332, National Bureau of Economic Research, Inc.
    10. Butera, Luigi & Houser, Daniel, 2018. "Delegating altruism: Toward an understanding of agency in charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 99-109.
    11. Yildirim, Huseyin, 2014. "Andreoni–McGuire algorithm and the limits of warm-glow giving," Journal of Public Economics, Elsevier, vol. 114(C), pages 101-107.
    12. Laura E. Grant, 2021. "Does the introduction of ratings reduce giving? Evidence from charities," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 978-995, July.
    13. Ginzburg, Boris, 2019. "Slacktivism," MPRA Paper 94606, University Library of Munich, Germany.
    14. Lange, Andreas & Price, Michael K. & Santore, Rudy, 2017. "Signaling quality through gifts: Implications for the charitable sector," European Economic Review, Elsevier, vol. 96(C), pages 48-61.
    15. Penz, R. Frederic & Hörisch, Jacob & Tenner, Isabell, 2022. "Investors in environmental ventures want good money—and a clean conscience: How framing, interest rates, and the environmental impact of crowdlending projects influence funding decisions," Technological Forecasting and Social Change, Elsevier, vol. 182(C).

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    More about this item

    Keywords

    Charitable giving; Value of information; Crowding-out;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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