Randomized Controlled Trials on Fundraising and Discrimination

• Applicant: Dr. Ulrich Glogowsky
• Subject Area: Economic Policy, Applied Economics
• Term: from 2017 to 2018
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 393877868

While traditional empirical methods have mainly focused on describing correlations, the identification of causal relationships has become the prime concern of more recent empirical studies. Randomized Controlled Trials play a vital role in this development. Such experimental research designs allow us to evaluate practice-oriented interventions and also enable us to explore fundamental mechanisms that govern economic decision making. This is both the motivation and the aim of the studies in this proposal. In particular, this proposal outlines two Randomized Controlled Trials dealing with the private provision of public goods and one experiment on the costs of discrimination.The first proposed study is concerned with substitution effects in fundraising. Fundraising is frequently said to be an appropriate remedy for the under-provision of public goods. Empirical evidence buttresses this belief: fundraising frequently increases donations. However, most of the available empirical studies evaluate the effects of single fundraising-instruments on donations raised by only one charity. Whether fundraising increases total funds or only reallocates donations between charities is not well understood. The first study addresses this welfare-relevant question applying a Randomized Controlled Trial.The second study focuses on over-sized fundraising campaigns, resulting in an inefficiently low provision level of public goods. The proposed paper starts from a widely-known empirical result: individuals’ intrinsic motivations to donate are heterogeneously distributed in the population. Many organization tend to ignore this heterogeneity and target their available fundraising-campaigns at the universe of potential donors. This behavior perpetuates the under-provision of public goods: each solicitation letter is not necessarily triggering additional funds but is associated with marginal costs. As a result, the marginal solicitation letter leads to a net loss. The second Randomized Controlled Trial studies for the first time, whether group-specific targeting of fundraising tools can countervail this type of inefficiency.The third proposed study deals with the economic costs of discrimination. Discrimination has severe consequences for those being discriminated against: it frequently results in unemployment, reduces individuals’ productivity, and implies that political interests of minorities are underrepresented. Yet little is known about the consequences for discriminators. In particular, our knowledge about whether individuals are ready to pay for engaging in the act of discrimination when it is costly for them is limited. For example, such a situation can arise if individuals avoid valuable information provided by a member of a disliked group, which may result in productivity losses. The third study considers such a situation and examines the little-studied effect of the costs of discrimination on the behavior of discriminators.

• DFG Programme: Research Fellowships
• International Connection: USA
• Host: Professor Alan Auerbach, Ph.D.