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Desert and Tangibility: Decomposing House Money Effects in a Charitable Giving Experiment

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  • Reinstein, David
  • Reiner, Gerhard

Abstract

Several papers have documented that when subjects play with standard laboratory “endowments” they make less self-interested choices then when they use money they have either earned through a laboratory task or brought from outside the lab. In the context of a charitable giving experiment we decompose common "house money" effects into two components: the tangibility of cash in hand relative to money (or ecu's) promised on a computer screen, and the desert of earned money relative to random windfall gains. While both components are found to be significant in non-parametric tests, the former effect, which has been neglected in previous studies, has a stronger effect on total donations. These results have clear implications for experimental design, and also suggest that the availability of less tangible payment methods may increase charitable donations.

Suggested Citation

  • Reinstein, David & Reiner, Gerhard, 2009. "Desert and Tangibility: Decomposing House Money Effects in a Charitable Giving Experiment," Economics Discussion Papers 2937, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:2937
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