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Income effect and altruism

  • Subhashish Modak Chowdhury

    (University of East Anglia)

  • Joo Young Jeon

    (University of East Anglia)

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    We investigate the consequences of a pure income effect on the altruistic behavior of donors. Inequity aversion theories predict either no effect or a decrease in giving, whereas warm-glow theory predicts an increase in giving with an increase in the common income of donor and receiver. Theoretical predictions being contradictory, we run a dictator game in which we vary the common show-up fee of both the dictator and the recipient, but keep an extra amount to be shared the same. The prediction of the warm-glow theory is supported.

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    File URL: http://www.uea.ac.uk/documents/166500/0/CBESS-12-04/a6f82f55-c04a-4b4f-927c-283c8d7342f9
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    Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 12-04.

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    Date of creation: 01 Oct 2012
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    Handle: RePEc:uea:wcbess:12-04
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    1. John A. List, 2007. "On the Interpretation of Giving in Dictator Games," Journal of Political Economy, University of Chicago Press, vol. 115, pages 482-493.
    2. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
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    5. Crumpler, Heidi & Grossman, Philip J., 2008. "An experimental test of warm glow giving," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1011-1021, June.
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    10. David Popp, 2001. "Altruism and the Demand for Environmental Quality," Land Economics, University of Wisconsin Press, vol. 77(3), pages 339-349.
    11. Carpenter, Jeffrey & Verhoogen, Eric & Burks, Stephen, 2005. "The effect of stakes in distribution experiments," Economics Letters, Elsevier, vol. 86(3), pages 393-398, March.
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    13. Olivier Armantier, 2006. "Do Wealth Differences Affect Fairness Considerations?," CIRANO Working Papers 2006s-13, CIRANO.
    14. Nicholas Bardsley, 2008. "Dictator game giving: altruism or artefact?," Experimental Economics, Springer, vol. 11(2), pages 122-133, June.
    15. Oxoby, Robert J. & Spraggon, John, 2008. "Mine and yours: Property rights in dictator games," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 703-713, March.
    16. Johansson-Stenman, Olof & Mahmud, Minhaj & Martinsson, Peter, 2005. "Does stake size matter in trust games?," Economics Letters, Elsevier, vol. 88(3), pages 365-369, September.
    17. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
    18. Konow, James, 2010. "Mixed feelings: Theories of and evidence on giving," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 279-297, April.
    19. Korenok Oleg & Edward L. Millner & Laura Razzolini, 2010. "Impure Altruism in Dictators’ Giving," Working Papers 1002, VCU School of Business, Department of Economics, revised Jan 2011.
    20. Knetsch, Jack L, 1989. "The Endowment Effect and Evidence of Nonreversible Indifference Curves," American Economic Review, American Economic Association, vol. 79(5), pages 1277-84, December.
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    22. Korenok, Oleg & Millner, Edward L. & Razzolini, Laura, 2012. "Are dictators averse to inequality?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 543-547.
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