Do Market Incentives Crowd Out Charitable Giving?

28 Pages Posted: 7 Jun 2013 Last revised: 20 May 2015

See all articles by Cary A. Deck

Cary A. Deck

University of Alabama - Department of Economics, Finance and Legal Studies

Erik O. Kimbrough

Chapman University - The George L. Argyros School of Business & Economics

Date Written: August 9, 2013

Abstract

Donations and volunteerism can be conceived of as market transactions with a zero explicit price. However, evidence suggests people may not view zero as just another price when it comes to pro-social behavior. Thus, while markets might be expected to increase the supply of assets available to those in need, some worry such financial incentives will crowd out altruistic giving. This paper reports laboratory experiments directly investigating the degree to which market incentives crowd out large, discrete charitable donations in a setting related to deceased organ donation. The results suggest markets increase the supply of assets available to those in need. However, as some critics fear, market incentives disproportionately influence the relatively poor.

Keywords: Pro-Social Behavior, Market Incentives, Crowding Out, Wealth Effects

JEL Classification: C9, D0, D6

Suggested Citation

Deck, Cary A. and Kimbrough, Erik O., Do Market Incentives Crowd Out Charitable Giving? (August 9, 2013). Journal of Socio-Economics, Vol. 47, 2013, Available at SSRN: https://ssrn.com/abstract=2275084 or http://dx.doi.org/10.2139/ssrn.2275084

Cary A. Deck

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Erik O. Kimbrough (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

One University Dr
Orange, CA 92866
United States

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