Giving in to social pressure Articles uri icon

publication date

  • September 2016

start page

  • 99

end page

  • 116

volume

  • 99

International Standard Serial Number (ISSN)

  • 0899-8256

Electronic International Standard Serial Number (EISSN)

  • 1090-2473

abstract

  • We develop a theory of charitable giving in which donors feel social pressure from a direct solicitation. We show that equilibrium donations are concentrated around a social norm. Despite a higher level of the public good, relatively poor and/or low altruism givers fare worse under social pressure and would avoid the solicitor at a cost. Aggregate donor welfare improves to the extent that the added social motive alleviates the underprovision of the public good; however, overprovision may result. Our theory therefore predicts a light-handed regulation for charitable solicitations, which is consistent with their exemption from the popular Do Not Call list in the U.S. We further show that contrary to pure altruism, a more equal income distribution may produce more of the public good. In fundraising campaigns where a social norm is not apparent, one may emerge endogenously if donors are not too heterogeneous. (C) 2016 Elsevier Inc. All rights reserved.

keywords

  • Altruism
    Social pressure
    Fundraising
    Charitable giving