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On the private exchange of charitable gifts

Author

Listed:
  • Diego Nocetti

    (Clarkson University)

Abstract
The private exchange of charitable gifts (e.g. charity gift-cards) has recently become an important source of donations to charities. In this paper we study this new phenomenon using the classical model of private provision of public goods, modified to account for exchange of private gifts. Contrary to intuition, we show that a change in social norms characterized by an increase in the amount spent on charitable gifts and a decrease in the amount spent on traditional gifts can decrease the total supply of donations. The magnitude of the change in donations depends on the contributors' degree of altruism, the efficiency of traditional gifts relative to a monetary gift, and the efficiency of charitable gifts in generating warm-glow.

Suggested Citation

  • Diego Nocetti, 2014. "On the private exchange of charitable gifts," Economics Bulletin, AccessEcon, vol. 34(1), pages 73-83.
    • Handle: RePEc:ebl:ecbull:eb-13-00647
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2014/Volume34/EB-14-V34-I1-P8.pdf
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    References listed on IDEAS

    as
    1. Andreoni, James, 1993. "An Experimental Test of the Public-Goods Crowding-Out Hypothesis," American Economic Review, American Economic Association, vol. 83(5), pages 1317-1327, December.
    2. Crumpler, Heidi & Grossman, Philip J., 2008. "An experimental test of warm glow giving," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1011-1021, June.
    3. Carmichael, H Lorne & MacLeod, W Bentley, 1997. "Gift Giving and the Evolution of Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 485-509, August.
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    5. Ruffle, Bradley J., 1999. "Gift giving with emotions," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 399-420, July.
    6. Bolton, Gary E. & Katok, Elena, 1998. "An experimental test of the crowding out hypothesis: The nature of beneficent behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 315-331, November.
    7. Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
    8. Waldfogel, Joel, 1993. "The Deadweight Loss of Christmas," American Economic Review, American Economic Association, vol. 83(5), pages 1328-1336, December.
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    10. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Charitable gifts; warm-glow; public goods;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • D6 - Microeconomics - - Welfare Economics

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