Essays on Preference for Charitable Giving

A large part of the total charitable giving (approximately 70%) in the United States come from individuals with modest incomes (Giving USA, 2019[1] ). These small gifts accumulate in powerful ways to mitigate the pain of individuals and communities in dire circumstances. Long recognized for its prominent role in shaping economic behavior, other-regarding preferences have been under close scientific scrutiny in the last several decades. In my dissertation, I use methods in experimental economics to explore three distinct topics in the economics of charitable giving literature: (i) Motivations for giving under cause-marketing, (ii) Role of social norms in explaining giving behavior, and (iii) Evolution of other-regarding preferences of students through the college-term. In section 2 of the dissertation, I explore if a partnership between consumer good sellers and charitable cause, also known as cause-marketing, can increase total donations for the cause. The answer to this question depends on whether individual donors care about their donations only to the extent that it adds to the total donations (altruism) or they derive additional utility from direct donations (warm-glow). Using a general model of impure altruism that accommodates for donations from cause-marketing and data from a lab experiment, I show that individuals do respond to donations from cause-marketing by reducing their own donations dollar-to-dollar, thereby leaving the total donations unchanged. In section 3 of the dissertation, I analyze the role of social norms in explaining the differences in giving behavior between different recipients. Earlier studies show that giving in a dictator game is sensitive to the extent to which a recipient is perceived as “deserving” of aid. Dictator transfers to a charity is observed to be significantly higher than that to a student. Along with measuring dictator transfers, I elicit social norms of giving in dictator games with different recipients (a student and a charity working for bush fire relief in Australia) using an incentivized coordination game. The results suggest that differences in giving behavior are closely related to differences in social norms of giving. I also find that subjects care more about adhering to social norms in a charitable giving context. Finally, in section 4 of the dissertation, I explore the evolution of other-regarding preferences in young adults through their college-terms. College students are frequently recruited as subjects in economic experiments, yet little is known if they undergo any kind of preference change through their college years. New social connections, a competitive academic environment and independent living under tight budget constraints, all have the potential to influence the other-regarding preferences of young adults. Using panel data from a large-scale experiment conducted at Rice University, I conclude that while other-regarding preferences of undergraduate students are generally stable, they do weaken through the college years, i.e. students become less generous. Furthermore, I find that this observation is consistent between both a survey measure and an incentivized measure of other-regarding preference