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Donating Time or Money: Are they Substitutes or Complements?

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  • Bastian Hartmann
  • Martin Werding

Abstract

Decisions to donate time or money for charitable purposes are typically seen as make-or-buy decisions, implying that there should be a clear distinction between individuals engaging in one of these two forms of giving and that this distinction should be somehow linked to opportunity costs. But this is not at all what we observe in micro-level data. We therefore suggest an alternative explanation by which time and cash donations are complements rather than substitutes. Assuming that there is asymmetric information about charities’ activities and their effectiveness, doing volunteer work may serve as a screening mechanism enabling donors to better assess the use that is made of the money they could contribute. We formalize this idea and, building on the European Social Survey (ESS), we also provide empirical evidence regarding the co-variation of volunteering and donating money which is suited to support our view.

Suggested Citation

  • Bastian Hartmann & Martin Werding, 2012. "Donating Time or Money: Are they Substitutes or Complements?," CESifo Working Paper Series 3835, CESifo.
    • Handle: RePEc:ces:ceswps:_3835
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    References listed on IDEAS

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    Cited by:

    1. Dittrich, Marcus & Mey, Bianka, 2021. "Giving time or giving money? On the relationship between charitable contributions," Journal of Economic Psychology, Elsevier, vol. 85(C).
    2. Ashley Harrell, 2021. "How can I help you? Multiple resource availability promotes generosity with low-value (but not high-value) resources," Rationality and Society, , vol. 33(3), pages 341-362, August.
    3. Marcus Dittrich & Bianka Mey, 2015. "Gender differences in volunteer activities: Evidence from German survey data," Economics Bulletin, AccessEcon, vol. 35(1), pages 349-360.

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    More about this item

    Keywords

    charities; cash donations; volunteer work; asymmetric information; screening; empirical evidence;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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