When Should the Ask Be a Nudge? The Effect of Default Amounts on Charitable Donations

Journal of Marketing Research, Forthcoming

114 Pages Posted: 18 Feb 2016  

Indranil Goswami

Department of Marketing; University of Chicago, Booth School of Business, Students

Oleg Urminsky

University of Chicago - Booth School of Business

Date Written: 2016

Abstract

How does setting a donation option as the default in a charitable appeal affect people’s decisions? In eight studies, comprising 11,508 participants making 2,423 donation decisions in both experimental settings and a large-scale natural field experiment, we investigate the effect of “choice-option” defaults on the donation rate, average donation amount, and the resulting revenue. We find (1) a “lower-bar” effect, where defaulting a low amount increases donation rate, (2) a “scale-back” effect where low defaults reduce average donation amounts and (3) a “default-distraction” effect, where introducing any defaults reduces the effect of other cues, such as positive charity information. Contrary to the view that setting defaults will backfire, defaults increased revenue in our field study. However, our findings suggest that defaults can sometimes be a “self-cancelling” intervention, with countervailing effects of default option magnitude on decisions and resulting in no net effect on revenue. We discuss the implications of our findings for research on fundraising specifically, for choice architecture and behavioral interventions more generally, as well as for the use of “nudges” in policy decisions.

Keywords: choice, decision-making, default, donation, heuristic, policy, prosocial, suggested amount

Suggested Citation

Goswami, Indranil and Urminsky, Oleg, When Should the Ask Be a Nudge? The Effect of Default Amounts on Charitable Donations (2016). Journal of Marketing Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2733314

Indranil Goswami

Department of Marketing ( email )

12 Capen Hall
Buffalo, NY 14260
United States

HOME PAGE: http://https://mgt.buffalo.edu/faculty/academic-departments/marketing/faculty/indranil-goswami.html

University of Chicago, Booth School of Business, Students ( email )

Chicago, IL
United States

Oleg Urminsky (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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