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Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid

  • Jonathan Meer
  • Harvey S. Rosen

We investigate how undergraduates' financial aid packages affect their subsequent donative behavior as alumni. The empirical work is based upon micro data on alumni giving at an anonymous research university. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly. Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. We conjecture that this phenomenon is caused by an "annoyance effect" -- alumni resent the fact that they are burdened with loans. 2) Scholarship aid reduces the size of a gift, but has little effect on the probability of donating. The negative effect of receiving a scholarship on donations decreases in absolute value with the size of the scholarship. We do not find any evidence that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.

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File URL: http://www.nber.org/papers/w17861.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17861.

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Date of creation: Feb 2012
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Publication status: published as Meer, Jonathan & Rosen, Harvey S., 2012. "Does generosity beget generosity? Alumni giving and undergraduate financial aid," Economics of Education Review, Elsevier, vol. 31(6), pages 890-907.
Handle: RePEc:nbr:nberwo:17861
Note: ED PE
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  1. Andreoni, James & Vesterlund, Lise, 2001. "Which is the Fair Sex? Gender Differences in Altruism," Staff General Research Papers 1951, Iowa State University, Department of Economics.
  2. Holmes, Jessica, 2009. "Prestige, charitable deductions and other determinants of alumni giving: Evidence from a highly selective liberal arts college," Economics of Education Review, Elsevier, vol. 28(1), pages 18-28, February.
  3. Leung, S.F. & Yu, S., 1992. "On the Choice Between Sample Selection and Two-Part Models," RCER Working Papers 337, University of Rochester - Center for Economic Research (RCER).
  4. Baade, Robert A. & Sundberg, Jeffrey O., 1996. "What determines alumni generosity?," Economics of Education Review, Elsevier, vol. 15(1), pages 75-81, February.
  5. Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2011. "The Hidden Benefits of Control: Evidence from a Natural Field Experiment," NBER Working Papers 17473, National Bureau of Economic Research, Inc.
  6. Meer, Jonathan, 2011. "Brother, can you spare a dime? Peer pressure in charitable solicitation," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 926-941, August.
  7. Alpizar, Francisco & Carlsson, Fredrik & Johansson-Stenman, Olof, 2008. "Anonymity, reciprocity, and conformity: Evidence from voluntary contributions to a national park in Costa Rica," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1047-1060, June.
  8. Clotfelter, C. T., 2003. "Alumni giving to elite private colleges and universities," Economics of Education Review, Elsevier, vol. 22(2), pages 109-120, April.
  9. Marr, Kelly A. & Mullin, Charles H. & Siegfried, John J., 2005. "Undergraduate financial aid and subsequent alumni giving behavior," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(1), pages 123-143, February.
  10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  11. Huck, Steffen & Rasul, Imran & Shephard, Andrew, 2013. "Comparing Charitable Fundraising Schemes: Evidence from a Natural Field Experiment and a Structural Model," CEPR Discussion Papers 9648, C.E.P.R. Discussion Papers.
  12. Brendan M. Cunningham & Carlena K. Cochi-Ficano, 2002. "The Determinants of Donative Revenue Flows from Alumni of Higher Education: An Empirical Inquiry," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 540-569.
  13. Meer, Jonathan & Rosen, Harvey S., 2009. "The impact of athletic performance on alumni giving: An analysis of microdata," Economics of Education Review, Elsevier, vol. 28(3), pages 287-294, June.
  14. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, 09.
  15. Monks, James, 2003. "Patterns of giving to one's alma mater among young graduates from selective institutions," Economics of Education Review, Elsevier, vol. 22(2), pages 121-130, April.
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