Comparing rebate and matching subsidies controlling for donors’ awareness: Evidence from the field

Catherine Eckel, Philip J. Grossman

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This paper compares the effectiveness of rebate and matching subsidies in the field and, to our knowledge, is the first to control for potential bias introduced by the failure to account for donors’ awareness of the offered subsidies. Where previous field experiments have typically been limited to either rebate subsidies or matching subsidies, we study both types and determine whether donors are aware of any offered subsidy. We provide evidence that this methodological shortcoming (i.e., the loss of control) is not trivial. Our findings suggest the assumption in earlier field studies, that the offered price is equal to the perceived or actual price, is likely incorrect and may result in underestimation of the price elasticities of giving. This set of results has strong implications for the design of effective subsidies in a variety of decision settings. In addition, our results serve to validate the lab studies’ finding that matching subsidies are more powerful than rebate subsidies of equivalent cost at increasing total giving to charities.

LanguageEnglish
Pages88-95
Number of pages8
JournalJournal of Behavioral and Experimental Economics
Volume66
DOIs
Publication statusPublished - 1 Feb 2017

Keywords

  • Charitable giving
  • Field experiment
  • Subsidies

Cite this

@article{8cbf16b3569d4c769f2afbe2418b8e57,
title = "Comparing rebate and matching subsidies controlling for donors’ awareness: Evidence from the field",
abstract = "This paper compares the effectiveness of rebate and matching subsidies in the field and, to our knowledge, is the first to control for potential bias introduced by the failure to account for donors’ awareness of the offered subsidies. Where previous field experiments have typically been limited to either rebate subsidies or matching subsidies, we study both types and determine whether donors are aware of any offered subsidy. We provide evidence that this methodological shortcoming (i.e., the loss of control) is not trivial. Our findings suggest the assumption in earlier field studies, that the offered price is equal to the perceived or actual price, is likely incorrect and may result in underestimation of the price elasticities of giving. This set of results has strong implications for the design of effective subsidies in a variety of decision settings. In addition, our results serve to validate the lab studies’ finding that matching subsidies are more powerful than rebate subsidies of equivalent cost at increasing total giving to charities.",
keywords = "Charitable giving, Field experiment, Subsidies",
author = "Catherine Eckel and Grossman, {Philip J.}",
year = "2017",
month = "2",
day = "1",
doi = "10.1016/j.socec.2016.04.016",
language = "English",
volume = "66",
pages = "88--95",
journal = "Journal of Behavioral and Experimental Economics",
issn = "2214-8043",
publisher = "Elsevier",

}

Comparing rebate and matching subsidies controlling for donors’ awareness : Evidence from the field. / Eckel, Catherine; Grossman, Philip J.

In: Journal of Behavioral and Experimental Economics, Vol. 66, 01.02.2017, p. 88-95.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - Comparing rebate and matching subsidies controlling for donors’ awareness

T2 - Journal of Behavioral and Experimental Economics

AU - Eckel, Catherine

AU - Grossman, Philip J.

PY - 2017/2/1

Y1 - 2017/2/1

N2 - This paper compares the effectiveness of rebate and matching subsidies in the field and, to our knowledge, is the first to control for potential bias introduced by the failure to account for donors’ awareness of the offered subsidies. Where previous field experiments have typically been limited to either rebate subsidies or matching subsidies, we study both types and determine whether donors are aware of any offered subsidy. We provide evidence that this methodological shortcoming (i.e., the loss of control) is not trivial. Our findings suggest the assumption in earlier field studies, that the offered price is equal to the perceived or actual price, is likely incorrect and may result in underestimation of the price elasticities of giving. This set of results has strong implications for the design of effective subsidies in a variety of decision settings. In addition, our results serve to validate the lab studies’ finding that matching subsidies are more powerful than rebate subsidies of equivalent cost at increasing total giving to charities.

AB - This paper compares the effectiveness of rebate and matching subsidies in the field and, to our knowledge, is the first to control for potential bias introduced by the failure to account for donors’ awareness of the offered subsidies. Where previous field experiments have typically been limited to either rebate subsidies or matching subsidies, we study both types and determine whether donors are aware of any offered subsidy. We provide evidence that this methodological shortcoming (i.e., the loss of control) is not trivial. Our findings suggest the assumption in earlier field studies, that the offered price is equal to the perceived or actual price, is likely incorrect and may result in underestimation of the price elasticities of giving. This set of results has strong implications for the design of effective subsidies in a variety of decision settings. In addition, our results serve to validate the lab studies’ finding that matching subsidies are more powerful than rebate subsidies of equivalent cost at increasing total giving to charities.

KW - Charitable giving

KW - Field experiment

KW - Subsidies

UR - http://www.scopus.com/inward/record.url?scp=84964853377&partnerID=8YFLogxK

U2 - 10.1016/j.socec.2016.04.016

DO - 10.1016/j.socec.2016.04.016

M3 - Article

VL - 66

SP - 88

EP - 95

JO - Journal of Behavioral and Experimental Economics

JF - Journal of Behavioral and Experimental Economics

SN - 2214-8043

ER -