Transaction costs, the opportunity cost of time and procrastination in charitable giving

Abstract

We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once, keep postponing. We conjecture that transaction costs will have a greater effect on donations if the solicitation is received when the opportunity cost of time is high. We find evidence of a transaction cost reducing donations, with the size of this effect depending on the opportunity cost of time, but no statistically significant evidence that giving people more time to donate increases procrastination and thus reduces donations.

Deadlines, Procrastination, and Inattention in Charitable Giving: A Field Experiment

“…However, this comparison of treatments with and without a deadline is confounded by the fact that the treatments with a four week deadline also include a matching subsidy, whereas the treatments with no deadline do not include a matching subsidy. Consistent with Damgaard and Gravert's results, Knowles and Servátka (2015) find no difference in charitable giving for deadline lengths of one hour, one day and one week in a laboratory experiment. Like Damgaard and Gravert, Knowles and Servátka did not include a no deadline treatment.…”

“…Therefore, it is an open question whether procrastination and inattention extend to such areas as charitable giving or voluntary work and whether people's actions in these other-regarding domains is driven by the same behavioral phenomena as in situations where completing the task benefits only the person who undertakes it. However, a recent lab experiment by Knowles and Servátka (2015) and a field experiment by Damgaard and Gravert (2014) find no evidence of a statistically significant deadline effect for charitable giving. Note, however, that neither of these studies includes a treatment where no deadline is specified and hence neither of them can be used to test the theoretical prediction derived by Taubinsky.…”

Opportunity Cost in Monetary Donation Decisions to Non-identified and Identified Victims

“…This is consistent with Study 4 in Frederick et al (2009), showing that listing other ways of spending money prior to a purchase served as an implicit opportunity cost reminder. When showing and asking people to make decisions about several appeals, they may either become less willing to help or post-pone making a decision at all (Knowles and Servátka, 2015). Another possibility is that making multiple donation decisions leads to emotional fatigue (Slovic, 2007) or cognitive overload (Tinghög et al, 2016), which then leads to lessened willingness to donate.…”

“…The effect of opportunity cost reminders on monetary donations is currently not well understood. The few studies that have studied opportunity cost for prosocial behaviors (DeVoe and Pfeffer, 2010; Knowles and Servátka, 2015;Reed et al, 2016) have mainly investigated other forms of charitable behavior than monetary donations (e.g., the effect of billing time, procrastination and solicitation, or the effect of moral identity) and therefore studied opportunity cost in terms of spending time rather than spending money. Although donating money and time are similar in many ways, there are differences as well.…”

Going along with the default does not mean going on with it: attrition in a charitable giving experiment

“…Those who pledged can then go on to donate. As in Knowles and Servátka (2015), collecting the remuneration has an opportunity cost. We can thus measure motivation, as participants who are more motivated to fulfil their promise are more likely to go on to collect their remuneration.…”