Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment

Craig Landry, Andreas Lange, John A. List, Michael K. Price, Nicholas G. Rupp

NBER Working Paper No. 11611^*
Issued in September 2005
NBER Program(s):   PE

---- Abstract -----

This study develops theory and uses a door-to-door fundraising field experiment to explore the economics of charity. We approached nearly 5000 households, randomly divided into four experimental treatments, to shed light on key issues on the demand side of charitable fundraising. Empirical results are in line with our theory: in gross terms, our lottery treatments raised considerably more money than our voluntary contributions treatments. Interestingly, we find that a one standard deviation increase in female solicitor physical attractiveness is similar to that of the lottery incentive¡ªthe magnitude of the estimated difference in gifts is roughly equivalent to the treatment effect of moving from our theoretically most attractive approach (lotteries) to our least attractive approach (voluntary contributions).

^*Published: Landry, Craig E., Andreas Lange, John A. List, Michael K. Price and Nicholas G. Rupp. "Toward An Understanding Of The Economics Of Charity: Evidence From A Field Experiment," Quarterly Journal of Economics, 2006, v121(2,May), 747-782.

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