Transactions Costs and Social Distance in Philanthropy: Evidence from a Field Experiment

The importance of various motivations for altruistic behavior is still an open question. We use data from a field experiment at Kiva, the online microfinance platform, to examine the role of transactions costs and social distance in philanthropy. Requests for loans are either written in English or another language, and our treatment consists of posting requests in the latter category with or without translation. We find evidence that relatively small transactions costs have a large effect on the share of funding coming from speakers of languages other than that in which the request was written. Social distance plays a smaller role in funding decisions. Additionally, our results demonstrate the importance of a lingua franca.

[1]  Yan Chen,et al.  Group Identity and Social Preferences , 2009 .

[2]  H. Tajfel,et al.  An integrative theory of intergroup conflict. , 1979 .

[3]  Edward,et al.  Measuring Trust , 2000 .

[4]  A. Rustichini,et al.  Individual Behavior and Group Membership , 2006 .

[5]  Jonathan Morduch,et al.  The role of subsidies in microfinance: evidence from the Grameen Bank , 1999 .

[6]  Jessica Pan,et al.  What Do Donors Discriminate On? Evidence From Kiva.org , 2011 .

[7]  M. Bateman.  Why Doesn t Microfinance Work?: The Destructive Rise Of Local Neoliberalism , 2010 .

[8]  J. Meer.  Brother, can you spare a dime? Peer pressure in charitable solicitation ☆ , 2011 .

[9]  George A. Akerlof,et al.  Economics and Identity , 2000 .

[10]  David Lucking-Reiley,et al.  The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign , 2002, Journal of Political Economy.

[11]  A. Dannenberg,et al.  Small is beautiful—Experimental evidence of donors’ preferences for charities , 2013 .

[12]  M. Mobius,et al.  How Much is a Friend Worth? Directed Altruism and Enforced Reciprocity in Social Networks , 2007 .

[13]  Lise Vesterlund,et al.  The informational value of sequential fundraising , 2003 .

[14]  H. Tajfel.  Social Psychology of Intergroup Relations , 1982 .

[15]  Ernan Haruvy,et al.  Social distance and reciprocity: An Internet experiment , 2007 .

[16]  John A. List,et al.  The role of social connections in charitable fundraising: Evidence from a natural field experiment , 2009 .

[17]  S. T. Buckland,et al.  An Introduction to the Bootstrap. , 1994 .

[18]  George A. Akerlof.  Social Distance and Social Decisions , 1997 .

[19]  Amiram Gafni,et al.  Putting Your Money Where Your Mouth Is , 2012, PharmacoEconomics.

[20]  Erzo F. P. Luttmer,et al.  Do fairness and race matter in generosity? Evidence from a nationally representative charity experiment , 2011 .

[21]  L. Reed.  State of the Microcredit Summit Campaign Report 2011 , 2011 .

[22]  Eric J. Johnson,et al.  Let's Get Personal: An International Examination of the Influence of Communication, Culture and Social Distance on Other Regarding Preferences , 2006 .

[23]  Jeffrey A. Frankel,et al.  The Regionalization Of The World Economy , 1997 .

[24]  Steffen Huck,et al.  Transactions Costs in Charitable Giving: Evidence from Two Field Experiments , 2010 .

[25]  Armin Schwienbacher,et al.  Crowdfunding: An Industrial Organization Perspective , 2010 .

[26]  J. Andreoni,et al.  Public goods experiments without confidentiality: a glimpse into fund-raising , 2004 .

[27]  Rachel T. A. Croson,et al.  Identity Congruency Effects on Donations , 2008 .

[28]  B. Keysar,et al.  Why don't we believe non-native speakers? The influence of accent on credibility , 2010 .

[29]  Oren Rigbi,et al.  The Effects of Usury Laws: Evidence from the Online Loan Market , 2012, Review of Economics and Statistics.

[30]  Hyejin Ku,et al.  Lingua franca: The role of English in international trade , 2010 .

[31]  J. Morduch.  The microfinance promise , 1999 .

[32]  G. Charness,et al.  What's in a Name? Anonymity and Social Distance in Dictator and Ultimatum Games , 2003 .

[33]  J. List,et al.  Testing for Altruism and Social Pressure in Charitable Giving , 2009, The quarterly journal of economics.