Giving to Charity to Signal Smarts: Evidence from a Lab Experiment

39 Pages Posted: 27 Sep 2017 Last revised: 23 Jun 2018

See all articles by Felipe Montano Campos

Felipe Montano Campos

University of San Andres (UdeSA)

Ricardo Perez-Truglia

University of California, Berkeley; National Bureau of Economic Research (NBER)

Date Written: June 2018

Abstract

The literature on charitable giving suggests that individuals may use their charitable donations to signal their altruism or their income. We argue that, rather than signaling income per se, individuals may want to signal other unobservable characteristics that correlate to income, such as their intelligence. We designed a laboratory experiment to test this hypothesis. We assigned endowments to individuals who could spend all or part of those endowments on a charitable donation. We cross-randomized the visibility of donations and the individuals’ perceptions about the effect of intelligence on the allocation of endowments. We found that the effect of donation visibility on donation amounts depends sharply on whether the individuals perceive that endowments are determined by intelligence. This evidence suggests that, consistent with our hypothesis, subjects may engage in charitable giving to signal their smarts.

Keywords: Charitable Giving, Signaling, Income, Intelligence

JEL Classification: C51, D11, D12

Suggested Citation

Montano Campos, Felipe and Perez-Truglia, Ricardo, Giving to Charity to Signal Smarts: Evidence from a Lab Experiment (June 2018). Available at SSRN: https://ssrn.com/abstract=3042937 or http://dx.doi.org/10.2139/ssrn.3042937

Felipe Montano Campos

University of San Andres (UdeSA) ( email )

Vita Dumas 284
(1644) Victoria, Pcia
Buenos Aires, Buenos Aires 1644
Argentina

Ricardo Perez-Truglia (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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