'Setting a Price' for Charitable Giving Increases Donations

Posted: 25 Feb 2015 Last revised: 6 Oct 2017

See all articles by Gordon T. Kraft-Todd

Gordon T. Kraft-Todd

Yale University, Faculty of Arts & Sciences, Department of Psychology

Michael I. Norton

Harvard Business School - Marketing Unit

David G. Rand

Massachusetts Institute of Technology (MIT)

Date Written: August 2, 2016

Abstract

Many people give to charity, but they typically give small amounts. This suggests that the psychological benefit of giving is derived more from whether someone donates than from how much they donate. Based on this insight, we propose a new method for increasing charitable donations: set a price for giving. If donors’ choice is limited to giving nothing or an amount substantially larger than what they would have given, many may still choose to give. In four online experiments (N=4931) and a large field experiment (N=3248), we provide evidence that setting a price for charitable giving increases the amount raised.

Keywords: charitable giving, altruism, donations, self-concept maintenance, price setting

JEL Classification: H41, L31

Suggested Citation

Kraft-Todd, Gordon T. and Norton, Michael I. and Rand, David G., 'Setting a Price' for Charitable Giving Increases Donations (August 2, 2016). Available at SSRN: https://ssrn.com/abstract=2568869 or http://dx.doi.org/10.2139/ssrn.2568869

Gordon T. Kraft-Todd (Contact Author)

Yale University, Faculty of Arts & Sciences, Department of Psychology ( email )

P.O. Box 208205
New Haven, CT 06520-8205
United States

Michael I. Norton

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

David G. Rand

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://www.daverand.org

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