Wednesday, March 4, 2009

The Economists on Giving

While the nonprofit community is all in a tizzy over charitable deductions, we might all benefit from hearing what economists have to say about what motivates giving.

This is why I love The Economist. It's so nice to have access to cranky, nonpartisan Brits when I need to be talked back off the cliff. In particular, I like it when they say this like this, "Economists, who tend to think self-interest governs most actions of man, are intrigued [by what motivates giving and volunteering], and have identified several reasons to explain good deed of this kind."

It's just so dry and reassuring.

Back in January, the magazine highlighted a series of experiments designed to identify "what motivates people to give money to charities or to donate blood." The results are potentially enlightening for the nonprofit community here in the States. They write,
"Tax breaks are, of course, one of the main [motivations], but donors are also sometimes paid directly for their pains, and the mere thought of a thank-you letter can be enough to persuade others to cough up. Some even act out of sheer altruism. But most interesting is another explanation, which is that people do good in part because it makes them look good to those whose opinion they care about. Economists call this 'image motivation.'"
If that's true, then could a reduction in tax breaks for giving be off-set by how much more generous the wealthy will look to their social circles?

I mean, it's a thought.

The full article describing these experiments, "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," by Messrs Ariely, Bracha, and Meier will be featured in American Economic Review in March 2009.

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