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Why Do People Give? Testing Pure and Impure Altruism

Mark Ottoni-Wilhelm, Lise Vesterlund, Huan Xie

American Economic Review · 2017 · Volume 107 · Issue 11

DOI: 10.1257/aer.20141222

Abstract

Researchers measure crowd-out around one level of charity output to identify whether giving is motivated by altruism and/or warm-glow. However, crowd-out depends on output, implying first that the power to reject pure altruism varies, and second that a single measurement of incomplete crowd-out can be rationalized by many different preferences. By instead measuring crowd-out at different output levels, we allow both for identification and for a novel and direct test of impure altruism. Using a new experimental design, we present the first empirical evidence that, consistent with impure altruism, crowd-out decreases with output.

Keywords

Altruism, Philanthropy, Intergenerational Transfers, Nonprofit Institutions, NGOs, Social Entrepreneurship

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