New Frontiers in How to Understand Fundraising by howardtheduck

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									New Frontiers in How to Understand Fundraising
Anna Breman Stockholm School of Economics A European Seminar on Civil Society and Governance September 25, 2007

Outline
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The Economics of Altruism  Why do Economist care about charity?  Theory Fundraising  Why fundraising?  Methodology What has been tested and what works?  Laboratory experiments  Field experiments Unexplored fields for future research Conclusions

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The Economics of Altruism ”Why do Economist care about charity?”
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Why would people give away their hardearned money?
A science based on self-interested behavior cannot easily accommodate behavior that is seemingly altruistic

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Vast majority of people contribute to charity

Theory
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Giving to charity is like any other good
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Depend on income and cost of giving

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Give to achieve status, insurance, future consumption Theory of warm-glow giving “impure altruism” (Andreoni, 1989, 1990)
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Altruistic: care about others Feel good about giving

Why study fundraising?
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Better understanding when and how people are willing to make contributions
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Help charities raise money Government tax policies for foreign aid

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Help economist to make better model of altruistic behavior

Methodology
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Influenced by research methods in medicine and psychology Experimentally test a treatment
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Laboratory experiments Field experiments

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A control group and one/several treatment groups
People are randomly assigned to control and treatment groups Randomized controlled experiment is relatively easy to analyze statistically

Laboratory experiment
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People are recruited to participate in an experiment (often student) Participants are given a sum of money ($10-20) and ask to decide how to divide the money between themselves and and a recipient (for example a charity) Compare how much was given in different treatment groups

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Disadvantages:
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Unnatural environment. Participants are given the money.

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Advantages:
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Control over the experiment and the information given to participants Can test questions that cannot be tested in the field (unethical, difficult to implement)

Field experiment
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In collaboration with charities, real donors are randomly assigned to control and treatment group Donors are contacted by phone or letters and asked to give money to a charitable cause Compare how much was given in different treatment groups using statistical methods Disadvatanges
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Less control than in a lab experiment. Require large number of observations to get statisctically significant results

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Advatanges:
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Donors use their own money. Directly relevant to charities

Examples of lab experiments
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Do people give more the more they know about the recipients? (”sponsor a child”) (Breman and Granström 2006)
Control group: no information about recipient Treatment groups; Foto (1), Information (2), Photo and information(3) Outcome?

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Do people give more when they can control what the money is used for? “Paternalism and corruption” (Breman, Masiye,
Granström, 2005)
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Control group: Recipient can choose what money is used for Treatment group: Recipients are given a gift of the same value as the money Outcome?

Field experiments
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How should charitable giving be subsidized?
UK: government match private contributions US: charitable contributions are tax deductible

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Matching versus rebates (Eckel and Grossman 2006)
Control groups: no subsidy Treatment groups: matching (1), rebate (2) (Eckel and Grossman, 2005, 2006) Outcome?

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Size of match (Karlan and List 2007)
Control groups: no subsidy Treatment groups: small match (1), medium match (2) large match (3) Outcome?

Field experiments
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Lotteries (List et al., 2006)
Door-to-door fundraising campaign Control group: ask for gift Treatment group: Participate in lottery of you give to charity Outcome?

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Gifts: (Falk, 2005; Carlsson, Stenman, 2006)
Fundraising by letters (gift = postcard), Fundraising at a national park (gift = souvenir) Control group: no gift Treatment group: one gift (1), two gifts (2) Outcome?

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Field experiment
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Giving over time (Breman, 2006, 2007)
Telemarketing campaign Monthly donors Control group: increase monthly contributions immediately Treatment group: increase monthly contributions, starting in two months time Outcome?

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Interaction donor – communicator (Breman, 2007)
Telemarketing campaign Each caller (= communicator) randomly assigned to a donor Are women more altruistic than men? Do female (male) donors give more to female of male communicators?
Outcome?

Future Research
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Loyalty: why are donors so loyal? (Average monthly donor 13 years) Giving Time (Volunteerism) Signaling: how re we affected by other people’s altruistic behavior?

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Conclusions
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Growing research field in economics Field experiments preferred methodology
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Relatively easy to implement High external value to researcher (compared to lab) Direct knowledge to fundraiser

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Interdisciplinary research field: economics, psychology, marketing research


								
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