What Can Social Preferences Tell Us about Charitable Giving? Evidence on Responses to Price of Giving, Matching, and Rebates

This paper investigates the relationship between heterogeneous social preferences and charitable giving under alternative prices of giving and types of subsidies (matching and rebates). We compare within-person decision-making in alternative contexts to determine whether there is carry over in behavior from one economic situation to another. Participants' social preferences are categorized as self-interested, inequity averse, or social surplus maximizing through a set of ten allocation decisions. In charitable giving treatments, we find evidence supporting several predictions consistent with the social preference types: social surplus maximizers are more likely than others to give to a charity that increases production, inequity averters and compassionate social surplus maximizers give more to charity than do other groups; all preference types give more when the price of giving declines, and social surplus maximizers and self-interested are more responsive to the price of giving than are inequity averters. We also find that all categories give more under matching than rebate subsidies and that rebates at lowsubsidy rates crowd-out private giving of inequity averters and compassionate social surplus maximizers. Price responsiveness is smaller under rebates than matching for all types and inequity averters do not respond to the price of giving under rebates. Our findings that people with different social preferences respond differently to incentives and to the type of charity have important implications for designing charitable fundraising campaigns