Essays in Applied Microeconomics

In this dissertation, I develop empirical methods, built on the recent advances in industrial organization, to study charitable giving and fundraising in the charity market. In the first essay, we propose a multiple discrete choice model with differentiated charitable products and estimate the model using a unique data set of donor lists for the ten largest charitable organizations in Pittsburgh. We find that some private benefits such as invitations to private dinner parties and special events are effective tools for fundraising. Our policy simulations suggest that the composition of private benefits has a potentially large impact on donor behavior. In the second essay, I investigate the determinants of donations to charitable organizations by incorporating their managerial capacity and fundraising productivity. Using data from environmental charities, I find that managerial capacity has a significantly positive impact on raising donations, which demonstrates the long-run benefits of managerial expenses. Fundraising productivity is a charity-specific and serially-correlated unobserved variable that causes an endogeneity problem in the estimation of the donation function. After controlling for the fundraising productivity, the estimated impact from managerial capacity on donations is significantly increased, while the impact from fundraising expenditure is significantly decreased. Finally, after estimating the donation function, I construct a measure of fundraising productivity and show that it is a key factor in explaining the variation of donations, suggesting that policy discussions should account for charities' differences in fundraising productivity and the causes of such differences.