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Instrument-induced bias in donation mechanisms: Evidence from the field

Author

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  • Jayson Lusk
  • Bailey Norwood

Abstract

Eliciting actual donations toward a public good has been proposed as a means of estimating a lower bound to individuals' compensating surplus, and can be accomplished using mail/phone surveys or field experiments. This study shows that when warm-glow is present, the elicitation instrument decreases the transaction costs of donating. This presents an obstacle to using the donation mechanism. As a remedy, we propose the use of a multi-donation mechanism where subjects can direct their donation to alternative public goods. Results from a field experiment confirm this instrument-induced bias can be large, suggesting field experiment practitioners should seriously consider how their experimental procedures may alter economic behavior.

Suggested Citation

  • Jayson Lusk & Bailey Norwood, 2006. "Instrument-induced bias in donation mechanisms: Evidence from the field," Framed Field Experiments 00194, The Field Experiments Website.
  • Handle: RePEc:feb:framed:00194
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    References listed on IDEAS

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    1. Hayes, Dermot J. & Jensen, Helen H., 2003. "Lessons from the Danish Ban on Feed-Grade Antibiotics," Choices, Agricultural and Applied Economics Association, vol. 18(3).
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    3. Bennett, Richard M. & Blaney, Ralph J. P., 2003. "Estimating the benefits of farm animal welfare legislation using the contingent valuation method," Agricultural Economics, Blackwell, vol. 29(1), pages 85-98, July.
    4. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    5. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    6. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    7. John A. List & Robert P. Berrens & Alok K. Bohara & Joe Kerkvliet, 2004. "Examining the Role of Social Isolation on Stated Preferences," American Economic Review, American Economic Association, vol. 94(3), pages 741-752, June.
    8. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
    9. Bennett, Richard M. & Blaney, Ralph J.P., 2003. "Estimating the benefits of farm animal welfare legislation using the contingent valuation method," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 29(1), July.
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    Cited by:

    1. List John A., 2007. "Field Experiments: A Bridge between Lab and Naturally Occurring Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-47, April.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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