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The price elasticity of warm-glow giving
- Gandullia, Luca
- Economics letters 2019 v.182 pp. 30-32
- demand elasticities, subsidies, surveys
- We examine the charitable giving behavior of warm-glow givers in response to the same donation incentive structure, but with formally different schemes. At this aim we implement a large online survey (N=1655) using the Amazon Mechanical Turk platform. First, we elicit and measure warm-glow giving. Then, we employ a between-subjects design in which each warm-glow donor (N=881) is randomly assigned to one of two treatment groups that differ for the subsidy (rebate or matching) and is asked to make a series of allocation decisions between himself and a charity of his choice. The results show that contributions are significantly more responsive to matching (-1.15) than to rebate subsidies (-0.17). Moreover, we provide evidence that, under rebate, price elasticity decreases as the warm-glow magnitude increases. For weak warm-glow givers, price elasticity is double that for strong warm-glow donors.