Back in "aught eight" I posted what I believed to be one of my most controversial beliefs. That I didn't support giving to what many consider to be worthwhile charities, the most controversial of which was cancer research. I was then convinced (read the conversation in the comments) by my loyal readers of the efficient benefits of those donations. That post was inspired by a Stand Up To Cancer celebrity campaign I saw on TV. It wasn't until recently that I figured out why that bothered me so much:
Every year, 90 percent 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, e.g., due to altruism or warm glow, and individuals would rather not give but dislike saying no, e.g., due to social pressure. We design a door-to-door fund-raising drive in which some households are informed about the exact time of solicitation with a flyer on their door-knobs; thus, they can seek or avoid the fund-raiser. We find that the flyer reduces the share of households opening the door by 10 to 25 percent and, if the flyer allows checking a `Do Not Disturb' box, reduces giving by 30 percent. 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 $3.5 for an in-state charity and $1.4 for an out-of-state charity. Our welfare calculations suggest that our door-to-door fund-raising campaigns on average lower utility of the potential donors.
Giving may be better than receiving, but not when we're giving out of guilt.