Hitting the Target but Missing the Point: How Donors Use Cost Information
Journal of Consumer Research · 2025 · Volume 52 · Issue 1
Abstract
Charities often advertise the cost of a given impact (e.g., $5 provides a meal). Though often intended to demonstrate cost-effectiveness, we find that donors also use the cost as a target. Therefore, the impact cost can be too low, reducing donation amounts, or too high, deterring donors from donating altogether. We propose that, whenever donors have a reference point for a reasonable donation, the revenue-maximizing impact cost is at or just below this reference point, due to loss aversion. We examined these predictions across two online studies ( N = 1,711) and one field experiment conducted within a US non-profit’s mailing appeal ( N = 141,161). Study 1 demonstrates that donors target impact costs; participants report giving more when the cost of a mosquito net is higher. Study 2, the field experiment, reveals the pernicious effect of setting a target too high. Study 3 tests how the reference donation amount informs the revenue-maximizing impact cost. Supplemental studies robustly support our optimal-target recommendation, while demonstrating that cost information is ubiquitous and theoretically distinct from other types of targets. Together, these results shed light on an often-unintended side effect of providing cost information, with practical insight on how to leverage it for higher donation revenue.
Keywords
psychology, behavioral economics and decision making, marketing communications, prosocial behavior, public policy issues, experimental design/analysis
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