A Japan’s Experimental Comparison of Rebate and Matching in Charitable Giving

ISER DP No. 1114

The Japanese Economic Review, 2021, https://doi.org/10.1007/s42973-021-00085-9

37 Pages Posted: 18 Feb 2021 Last revised: 18 Aug 2021

See all articles by Shusaku Sasaki

Shusaku Sasaki

Faculty of Economics, Tohoku Gakuin University

Hirofumi Kurokawa

School of Economics and Management

Fumio Ohtake

Osaka University - Center for Infectious Disease Education and Research

Date Written: January 19, 2021

Abstract

This study uses a Japanese nationwide sample and experimentally compares rebate and matching, both of which are schemes intended to lower the price of monetary donation. Standard economic theory predicts that the two schemes will have the same effect on individuals’ donation behavior when their donation price is equivalent. However, we conduct an incentivized economic experiment through the Internet on 2,300 Japanese residents, and find that matching, which lowers the donation price by adding a contribution from a third-party, increases individuals’ donation expenditures compared to rebate, which lowers it through a refund from a third-party. Specifically, the experimental result shows that the donation expenditure in a 50% rebate treatment drops by approximately ¥126 compared to the control, while in a 1:1 matching treatment with essentially the same price of donation as the 50% rebate, the expenditure conversely rises by approximately ¥56. This tendency is consistent with the results of previous experimental studies comparing the two schemes. We further empirically confirm that the superiority of 1:1 matching over 50% rebate is not conclusively influenced by the participants’ confusion or misunderstanding, or budget constraint lines’ difference between the two schemes. Although the Japanese government have previously enriched rebate’s content, the level of monetary donations by the Japanese people is still low on an international scale. Based on this study’s findings, we discuss the possibility that implementing matching into the society effectively encourages their donation behavior.

Keywords: Charitable subsidy, Tax incentive, Framing effect, Online experiment

JEL Classification: D91, H20, C91

Suggested Citation

Sasaki, Shusaku and Kurokawa, Hirofumi and Ohtake, Fumio, A Japan’s Experimental Comparison of Rebate and Matching in Charitable Giving (January 19, 2021). ISER DP No. 1114, The Japanese Economic Review, 2021, https://doi.org/10.1007/s42973-021-00085-9, Available at SSRN: https://ssrn.com/abstract=3773917 or http://dx.doi.org/10.2139/ssrn.3773917

Shusaku Sasaki (Contact Author)

Faculty of Economics, Tohoku Gakuin University ( email )

1-3-1 Tsuchitoi Aoba-ku
Sendai, 980-8511
Japan

HOME PAGE: http://ssasaki.weebly.com/

Hirofumi Kurokawa

School of Economics and Management ( email )

Japan

Fumio Ohtake

Osaka University - Center for Infectious Disease Education and Research ( email )

1-7 Machikaneyamacho
Toyonaka
Osaka, 560-0043
Japan

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