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The Bonus-Income Donation Norm

Author

Listed:
  • Michalis Drouvelis
  • Adam Isen
  • Benjamin M. Marx
Abstract
Can social norms affect fundamental patterns of behavior such as income effects? Studies of determinants of giving to charities and other individuals yield a wide range of income-effect estimates. We conduct two experiments to first test whether the effect of income on charitable giving depends on whether the income is earned and then test whether any difference in the effects by income source can be explained by social norms. Our first experiment induces random variation in both earned income and windfall bonuses and shows that only bonuses increases charitable donations. The second experiment uses an incentivized coordination game to investigate whether social norms can explain this donation pattern. Perceptions of what most people would consider a morally appropriate donation depend on the amount of income and whether it is a windfall. The norms elicited in the second experiment match the donation patterns in the first experiment both overall and across subject demographics, pointing to social norms as a key determinant of charitable giving.

Suggested Citation

  • Michalis Drouvelis & Adam Isen & Benjamin M. Marx, 2019. "The Bonus-Income Donation Norm," CESifo Working Paper Series 7961, CESifo.
    • Handle: RePEc:ces:ceswps:_7961
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7961.pdf
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    References listed on IDEAS

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    Cited by:

    1. Michael Kurtz & Steven Furnagiev & Rebecca Forbes, 2023. "A field study on the role of incidental emotions on charitable giving," Theory and Decision, Springer, vol. 94(1), pages 167-181, January.
    2. Tatyana Deryugina & Benjamin M. Marx, 2021. "Is the Supply of Charitable Donations Fixed? Evidence from Deadly Tornadoes," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 383-398, September.
    3. Marius A. K. Ring & Thor Olav Thoresen, 2022. "Wealth Taxation and Charitable Giving," CESifo Working Paper Series 9700, CESifo.
    4. Drouvelis, Michalis & Marx, Benjamin M., 2018. "Prosociality spillovers of working with others," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 205-216.
    5. Michalis Drouvelis & Benjamin M. Marx, 2021. "Dimensions of donation preferences: the structure of peer and income effects," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 274-302, March.
    6. Drouvelis, Michalis & Marx, Benjamin M., 2022. "Can charitable appeals identify and exploit belief heterogeneity?," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 631-649.

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    More about this item

    Keywords

    charitable; donation; warm glow; social preferences; income effect; experiment;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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