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Charitable giving when altruism and similarity are linked

Listed author(s):
  • Rotemberg, Julio J.

This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with while the second is the dependence of peoples' self-esteem on the extent to which they perceive that others agree with them. Government spending crowds out the charity that ensues from these forces only modestly. Moreover, people's donations tend to rise when others donate. In some equilibria of the model, poor people give little because they expect donations to come mainly from richer individuals. In others, donations by poor individuals constitute a large fraction of donations and this raises the incentive for poor people to donate. The model provides interpretations for episodes in which the number of charities rises while total donations are stagnant.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047272712001028
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 114 (2014)
Issue (Month): C ()
Pages: 36-49

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Handle: RePEc:eee:pubeco:v:114:y:2014:i:c:p:36-49
DOI: 10.1016/j.jpubeco.2012.09.003
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
  2. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
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  11. David C. Ribar & Mark O. Wilhelm, 2002. "Altruistic and Joy-of-Giving Motivations in Charitable Behavior," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 425-457, April.
  12. Sugden, Robert, 1982. "On the Economics of Philanthropy," Economic Journal, Royal Economic Society, vol. 92(366), pages 341-350, June.
  13. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
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  15. Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-1028, September.
  16. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
  17. Susan Rose-Ackerman, 1982. "Charitable Giving and “Excessive†Fundraising," The Quarterly Journal of Economics, Oxford University Press, vol. 97(2), pages 193-212.
  18. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
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