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Truth in giving: Experimental evidence on the welfare effects of informed giving to the poor

  • M. Fong, Christina
  • Oberholzer-Gee, Felix
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    It is often difficult for donors to predict the value of charitable giving because they know little about their recipients. This concern is particularly acute when making contributions to organizations that serve heterogeneous populations. Prior research shows that donors are more generous if they know their assistance benefits a group they like. But we know little about the demand for such information. To start closing this gap, we study transfers of income to real-world poor people in dictator games. Our dictators can purchase signals about why the recipients are poor. We find that a third of the dictators are willing to pay money to learn more about their recipient. Dictators who acquire information mostly use it to withhold resources from less-preferred types, leading to a drastic decline in aggregate transfers. With endogenous information about recipients, we find that all types of poor recipients are worse off.

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    Article provided by Elsevier in its journal Journal of Public Economics.

    Volume (Year): 95 (2011)
    Issue (Month): 5 ()
    Pages: 436-444

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    Handle: RePEc:eee:pubeco:v:95:y:2011:i:5:p:436-444
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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    1. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, vol. 92(4), pages 1218-1221, September.
    2. Alesina, Alberto & Giuliano, Paola, 2009. "Preferences for Redistribution," IZA Discussion Papers 4056, Institute for the Study of Labor (IZA).
    3. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August.
    4. Benabou, Roland & Tirole, Jean, 2005. "Incentives and Prosocial Behavior," IZA Discussion Papers 1695, Institute for the Study of Labor (IZA).
    5. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    6. Dana, Jason & Cain, Daylian M. & Dawes, Robyn M., 2006. "What you don't know won't hurt me: Costly (but quiet) exit in dictator games," Organizational Behavior and Human Decision Processes, Elsevier, vol. 100(2), pages 193-201, July.
    7. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2009. "Testing for Altruism and Social Pressure in Charitable Giving," NBER Working Papers 15629, National Bureau of Economic Research, Inc.
    8. Corneo, Giacomo & Grüner, Hans Peter, 2001. "Individual Preferences for Political Redistribution," CEPR Discussion Papers 2694, C.E.P.R. Discussion Papers.
    9. Oberholzer-Gee Felix & Eichenberger Reiner, 2008. "Fairness in Extended Dictator Game Experiments," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-21, July.
    10. Corneo, Giacomo & Fong, Christina M., 2007. "What´s the monetary value of distributive justice," Discussion Papers 2007/8, Free University Berlin, School of Business & Economics.
    11. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the United States Have a European-Style Welfare State?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 187-278.
    12. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer, vol. 33(1), pages 67-80, October.
    13. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October.
    14. Fong, Christina M. & Bowles, Samuel & Gintis, Herbert, 2006. "Strong reciprocity and the welfare state," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
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