An Economic and Ethical Approach to Charity and to Charity Endowments

We examine how and why donors divide gifts between people in the present (across distance) and between the present and future (across time). US donors tend to give less to charities that benefit the poor and more to charities that benefit the non-poor (such as museums, universities, and arts organizations). Many of these wealthier charities have created endowments that benefit not only present persons, but also future persons. We develop a shorthand framework for linking time to distance in charitable allocations that incorporates a “proximity preference,” i.e., charity that prefers those who are nearer to us whether by reason of physical distance, psychic-identity, or temporal distance. Even though ethical considerations suggest that recipients' level of need should be the dominant factor in allocating gifts, donors also express preferences, ceteris paribus, for benefits arriving sooner rather than later, and for recipients who are ``closer'' rather than farther away.     

MEASURING THE ECONOMIC VALUE OF VOLUNTEER WORK GLOBALLY: CONCEPTS,ESTIMATES, AND A ROADMAP TO THE FUTURE

ABSTRACT: This article explores alternative approaches for measuring the economic value of volunteer work, develops a methodology for producing global estimates of this value using existing data sources, and identifies a new data source that promises to yield significantly improved data on which to base such estimates in the future at both the global and national levels. Both volunteering through organizations and directly for individuals are considered. Different approaches to valuation, including the replacement cost, opportunity cost, and social benefits approaches and both observed and reported market proxies, are examined. Based on a number of criteria, the replacement cost method using observed market wages is recommended. Using this method, the article estimates that ‘volunteerland,’ if it were its own country, would have the second largest adult population of any country in the world, and would be the world's seventh largest economy. The article concludes by discussing a new International Labour Organization Manual on the Measurement of Volunteer Work that adopts the basic method for defining and valuing volunteer work outlined here and promises to generate a much more robust and coherent body of data on volunteer work than has ever been available both globally and nationally.     

AN EXAMINATION OF VOLUNTEER MOTIVATION IN CREDIT UNIONS: INFORMING VOLUNTEER RESOURCE MANAGEMENT

ABSTRACT: Volunteer recruitment and retention is a problem that most credit unions experience. Research suggests that knowledge of volunteer motivation can inform volunteer management strategies. This paper uses a survey approach to determine whether current volunteers in credit unions in Northern Ireland are more motivated by the actual act of volunteering, by the output from the volunteering activity (including altruism) or because the volunteering activity increases their human capital value. Altruistic reasons are found to be the most influential, with the act of volunteering also scoring highly. This knowledge should inform volunteer recruitment programmes and internal appraisal processes as management can reinforce messages that provide positive feedback to volunteers on the social benefits being achieved by the credit union. This will further motivate current volunteers, ensuring retention. When motivation was analyzed by volunteer characteristics we found that older volunteers, retired volunteers and volunteers who are less educated are more motivated in their role. There was little evidence that individuals volunteer to improve their human capital worth.     

How close to home does charity begin?

ABSTRACT

This paper uses a field experiment to analyse the extent to which people are more inclined to support a charity focused on people or causes in their own region, compared to regions in other parts of the country. New Zealand landowners were incentivized to take part in an online survey by being told they could choose a charity from a list of four that would receive a $10 donation if they completed the survey. Importantly, the charities are based in different regions of the country. We find evidence of a significant declining radius of altruism: not only do people prefer to support charities in their own area, the further away a charity is located, the less likely people are to support it. These findings highlight the importance of geographic distance (independent of social distance) in charitable giving.     

The Role of United Charities in Fundraising: The Case of Singapore

Abstract: Theory suggests that a united charity helps to economize on fundraising costs by reducing competition for donations among member charities. However, donors often cannot control the allocation of their donations, and charities may dislike the monitoring of their activities. This paper examines these and other issues relating to the Community Chest of Singapore. The results, based on analysis of financial positions and fundraising costs of a large number of charities, suggest that the Community Chest does possess important fundraising advantages. Thus charities in financial difficulties or in need of funds for additional programs tend to seek membership. However, organizations that value their autonomy and independence, and that are able to achieve low fundraising costs tend to remain as non‐members. Thus a monopoly agency raising funds for all charities in the future is unlikely in the case of Singapore.     

Volunteer Militaries,The Draft,and Support for War

This study models how a nation's military manpower system affects the decision to go to war. Manpower systems differ primarily in how they distribute costs: the volunteer system shares the war's manpower costs broadly, whereas the draft forces a subset of the population to bear a disproportionate share of the load. This difference affects an office‐ and policy‐motivated politician's decision to go to war. The draft induces prowar policy‐makers to pursue more wars than the volunteer military does, whereas the volunteer system induces antiwar policy‐makers to pursue more wars than the draft does. The manpower systems cannot be generically ranked by efficiency because each makes errors the other avoids, but the volunteer system induces selection of more efficient wars for a large class of plausible preference distributions.     

Family policy,intrahousehold bargaining,and child health

This study examines the effects of an exogenous change in family policy in Ethiopia on women empowerment and the allocation of resources toward child health. Empowerment is formalized as an unobserved latent variable based on a large set of questions pertaining to women's autonomy and decision-making power. Exploiting the time and regional variation in the implementation of the law, the study finds that early implementation of the reform increases women's access to information, literacy and education levels, and their assertiveness toward family planning and domestic violence. In addition, more decision power in the hands of women is found to have a positive impact on investments in the health and nutrition of children. The findings suggest that factors that do not enter the individual's preferences may affect outcomes for individuals and emphasize the role of intrahousehold heterogeneity. The results are robust to a battery of validity and specification checks.     

Testing for altruism and social pressure in charitable giving

Every year, 90% of Americans give money to charities. Is such generosity necessarily welfare enhancing for the giver? We present a theoretical framework that distinguishes two types of motivation: individuals like to give, for example, due to altruism or warm glow, and individuals would rather not give but dislike saying no, for example, due to social pressure. We design a door-to-door fund-raiser in which some households are informed about the exact time of solicitation with a flyer on their doorknobs. Thus, they can seek or avoid the fund-raiser. We find that the flyer reduces the share of households opening the door by 9% to 25% and, if the flyer allows checking a Do Not Disturb box, reduces giving by 28% to 42%. The latter decrease is concentrated among donations smaller than $10. These findings suggest that social pressure is an important determinant of door-to-door giving. Combining data from this and a complementary field experiment, we structurally estimate the model. The estimated social pressure cost of saying no to a solicitor is $3.80 for an in-state charity and $1.40 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower the utility of the potential donors.     

Breaking the norm: An empirical investigation into the unraveling of good behavior

We present results from an artefactual field experiment conducted in rural Peru that considers whether observing non-reciprocal behavior influences an individual's decision to reciprocate. Specifically, we consider the behavior of second movers in a trust game, assessing whether their decision to reciprocate is influenced by the observed reciprocity of others. In documenting the impact of an external shock to observed reciprocity, this paper shows that small increases in non-reciprocal behavior result in an unraveling of the norm of reciprocity. Survey data is used to explore mechanisms by which this occurred. Results are not consistent with learning effects, suggesting that preferences may be changed by observing others deviating from a norm of reciprocity. These results suggest that investing in encouraging trustworthy behavior can have large benefits in situations where individuals are observing each other's behavior, such as may be the case in a new market institution.     

THE VALUE OF VOLUNTEER LABOR AND THE FACTORS INFLUENCING PARTICIPATION: EVIDENCE FOR THE UNITED STATES FROM 2002 THROUGH 2005

According to the U.S. Department of Labor, the number of people who volunteered rose from 59.8 million in 2002 to 65.4 million in 2005. Those volunteering benefit from their activity in various ways; however, these benefits are non-pecuniary and are generally not recognized in the national economic accounts used to measure gross domestic product (GDP). This paper uses data from the 2002–05 Current Population Survey Volunteer Supplements to assign a dollar value to volunteering. Different methodologies yield annual estimates from $116 to $153 billion (in 2005 dollars) over the four years (between 0.9 and 1.3 percent of 2005 GDP). Additionally, characteristics of individuals most likely to volunteer are identified. The volunteer rate varies by demographic characteristics in addition to geographic location, labor force participation, and business sector. Furthermore, the data suggest that volunteering is a "normal good" because participation increases with income even after controlling for observables.     

Party hacks and true believers: The effect of party affiliation on political preferences

This paper examines the effect of party affiliation on an individual's political views. To do this, we exploit the party realignment that occurred in the U.S. due to abortion becoming a more prominent and highly partisan issue over time. We show that abortion was not a highly partisan issue in 1982, but a person's abortion views in 1982 led many to switch parties over time as the two main parties diverged in their stances on this issue. We find that voting for a given political party in 1996, due to the individual's initial views on abortion in 1982, has a substantial effect on a person's political, social, and economic attitudes in 1997. These findings are stronger for highly partisan political issues, and are robust to controlling for a host of personal views and characteristics in 1982 and 1997. As individuals realigned their party affiliation in accordance with their initial abortion views, their other political views followed suit.     

Mixed feelings: Theories of and evidence on giving

This paper examines possible motives and institutional factors that impact giving. Specifically, I consider alternative theories parallel to dictator experiments that generate evidence on both allocation decisions and their effect on feelings. A number of new empirical findings as well as new interpretations for previously reported findings result. A novel test distinguishes warm glow from impure altruism and rules out the former as the sole motive for giving. Very generous donations to charities that aid the needy (with modal gifts of the entire dictator's stakes) cannot be attributed to familiarity with the charities. A charity that offers a matching grant increases its revenues by drawing donors and donations away from one that does not, although aggregate charitable donations do not rise. Additional results on emotions paint a picture of “mixed feelings:” generosity creates good feelings when the recipients are charities and bad feelings when they are fellow students. No group of dictators, however, feels better, on average, than a control group that is given no opportunity to donate. I propose a simple model that accounts for these results on allocation behavior and feelings by incorporating elements of two approaches, unconditional altruism and social preference theories, that to date have mostly evolved independently. A critical feature of this model is the social norm, and the results of the experiments corroborate the theory in the context of two norms of distributive justice that are important to real world giving: equity and need.     

Why volunteer? Evidence on the role of altruism,image, and incentives

We examine motivations for prosocial behavior using new data on volunteer firefighters that contain a dictator game based measure of altruism, surveyed measures of other behavioral factors, and call records that provide an objective measure of time spent volunteering. Controlling for a variety of other explanations, we find that the decision to volunteer is positively correlated with altruism as well as with concern for social reputation or “image.” Moreover, by utilizing variation in the presence and level of small stipends paid to the firefighters, we find that the positive effect of monetary incentives declines with image concerns, supporting a prediction that extrinsic incentives can crowd out image motivation for prosocial behavior.     

The cohort effect of political change on language speaking: Evidence from Hong Kong

It has been proven that language is a symbol of culture and politics. This study investigates the cohort effect of Hong Kong's handover on the language spoken in adulthood based on the 2006 and 2011 Hong Kong population censuses. We find that Mandarin is more likely to be used by Hong Kong natives who were exposed to the transfer of sovereignty over Hong Kong in 1997 during their school-age years, especially the generation that were exposed during their primary-school years. This cohort insisted on speaking Mandarin, even when the political environment changed from 2006 to 2011. Our evidence reveals that the political change that occurs during one's school-age years has a long-term impact on an individual's behaviour in adulthood. Further discussion indicates that exposure to political change such as regime transfer during school-age years impacts an individual's national identity.     

Planning Retirement Income in Australia: Routes through the Maze

Individual retirees face a daunting task when they consider how best to invest their accumulated superannuation account and non-superannuation savings. This article highlights the fact that there is rarely an obvious decision in this choice and that the optimal decision depends on a number of factors. These factors include the valuation criterion adopted, the level of benefits, the individual's income level, the means-tests, the tax rates on income and superannuation benefits and the person's life expectancy. The optimal behaviour at retirement is significantly affected by the individual characteristics of relative lifetime earnings and post-retirement rates of mortality.     

The impact of taxes and wasteful government spending on giving

We examine how taxes impact charitable giving and how this relationship is affected by the degree of wasteful government spending. In our model, individuals make donations to charities knowing that the government collects a flat-rate tax on income (net of charitable donations) and redistributes part of the tax revenue. The rest of the tax revenue is wasted. The model predicts that a higher tax rate increases charitable donations. Surprisingly, the model shows that a higher degree of waste decreases donations (when the elasticity of marginal utility with respect to consumption is high enough). We test the model’s predictions using a laboratory experiment with actual donations to charities and find that the tax rate has an insignificant effect on giving. The degree of waste, however, has a large, negative and highly significant effect on giving.

     

Fundraising and Optimal Policy Rules

This paper develops a simple spatial model of fundraising, in which charities select a target population to solicit donations. First, we show that in a competitive charity market without any intervention, the number of charities in the market and/or the overall net funds raised by charities may be suboptimal. Next, we analyze whether a social planner can prevent such shortcomings and show that a regulatory mechanism can be designed to achieve socially desirable outcomes. In contrast to the previous literature, our model does not necessarily produce monopoly as the optimal market structure. We show that if fixed costs associated with establishing charities are sufficiently low, then the optimal market structure is not a monopoly. Given the importance of the trade‐off between the volume and variety of charitable services, we argue that this result may be of particular interest to policy makers.     

Volunteering for heterogeneous tasks

We model the search for volunteers as a war of attrition. Every player is tempted to wait for someone else to volunteer for the tasks. When tasks are not equivalent, it may be optimal to volunteer quickly to perform an easy task. We analyze the trade-off between volunteering for an easy task and taking the risk of having to perform a more strenuous task in order to get the chance of avoiding all tasks. When the cost of waiting is borne by agents until every task has found a volunteer, we show that it may be optimal to volunteer for the difficult task even if an easier task is available, in order to speed up the process and reduce the costs of waiting.     

JOB SEARCH AND ASSET ACCUMULATION UNDER BORROWING CONSTRAINTS*

This article examines the relationship between wealth accumulation and job search dynamics. It proposes a model in which risk‐averse individuals search for jobs, save, and borrow to smooth their consumption. One motivation for accumulating wealth is to finance voluntary quits in order to search for better jobs. Using data on men from the National Longitudinal Survey (1979 cohort), I estimate the individual's dynamic decision problem. The results show that borrowing constraints are tight and reinforce the influence of wealth on job acceptance decisions, namely that more initial wealth and access to larger amounts of credit increase wages and unemployment duration.     

Demand-side factors in optimal land conservation choice

The dominant paradigm of conservation-reserve planning in economics is to optimize the provision of physical conservation benefits given a budget constraint, implicitly assuming the value of biodiversity and ecosystem function is not affected by human proximity to that natural capital. There is evidence, however, that human willingness to pay (WTP) for conservation declines with distance—a phenomenon we call “spatial value decay”. This paper begins a new strand of the conservation planning literature that takes demand-side factors – location of people in the landscape, the degree to which WTP for conservation depends on proximity – into account. We use theoretical models of linear abstract landscapes to explore the impact of demand-side factors on two facets of conservation choices: siting of a single reserve when conservation potential is greatest near a critical site, and siting of multiple reserves when fragmentation reduces physical conservation services produced. Our results show how planners should sometimes employ increased fragmentation to capture value when people's preferences are not very highly localized, and how optimal policy balances proximity to the ecologically critical site with proximity to people. In some scenarios, the payoff to using a reserve design approach that considers demand-side factors is large, but we find that spatial value decay reduces the benefits that can be gained from any conservation-planning approach.