Monday, December 21, 2009

Giving is social 

A friend of mine works in a church and told me this story this weekend. His church is having an Advent fundraising effort to help provide potable water to African villages. (I think it's this group. I've supported them and think they are a good group.) They set a target for the effort which my friend thinks is a modest goal -- each member-family provides enough money to bring water to one family (which requires about $4 per family.) In the first three weeks they raise almost double that number. The church leadership now has a decision to make -- do we announce how well we're doing before the last collection for the project? Their fear is that it encourages free-riding and reduces collections on the last week. In fact, my friend finds, it went up. He asks me, is this economically rational?

My hypothesis is that everyone wants to be part of a success. Announcing that it already is and then completing the project allows others to purchase (via donation) the good feeling of being part of it. "Yes, wasn't that project great? I'm glad I gave to it." You can imagine the conversations over coffee in the church narthex. My friend wondered why the leadership didn't set a higher target, and if they should. I responded no, you should underpromise and overdeliver. I think you can overdo that, as biasing one's expectations downwards leads over time to people expecting overdelivery.

We know from economic experiments that social influence on charitable giving is an important factor. I also noted that his church collected donations by placing jars in front of the sanctuary and having people bring the money forward. Nobody wants to be seen not standing up, particularly when the pastor has just told you everyone else gave more than expected. The combination of the method of collection and signaling others' donations were good incentives to get others to also give.

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Wednesday, December 02, 2009

Cash offends some people 

I have an old friend from my grad school days who once said of giving gifts, "cash offends no one." He, like me, was trained as an economist and to us it seemed obvious. And Mrs. S and I are more often than not likely to send gift cards or checks to my family out East for the holidays. Costs less to send, and you can use it everywhere. Cash offends no one.

But many readers will say "no, not always." You can't give cash to a romantic interest; they won't gasp with delight when they open the pretty box and see a check inside. Even my parents seem to remember and like more when I send something other than cash, even when we know that gifts destroy value.

Bryan Caplan argues that our understanding of people is improved when they are better at being selfish. In the formal rules that economists think apply to being "saintly selfish" Caplan includes not putting someone else's satisfaction directly as a factor in one's own. Yet doesn't that seem to be the gift problem in small: I only really worry about buying gifts for those closest to me; a niece or nephew almost always gets the gift card, but never the spouse? Why, if not because her happiness directly infuences mine? "If Mama ain't happy, ain't nobody happy."

I suspect that interdependent-utility-functions condition is the one we find least realistic. Turns out, unfortunately, you can't prove many of the welfare-maximizing properties of competitive markets if you relax the assumption of independent utility.

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Monday, August 03, 2009

Strings attached 

Several months ago Brandeis University announced that, to help close a $10 million deficit in its budget, it would close a museum on campus and sell the art within. It has since said it would keep the museum open, but would still sell much of the art within. Now they are being sued by three overseers of the museum to try to prevent the sale. The museum, despite the university's intentions, remains open, and its website even says mockingly "To paraphrase Mark Twain, the rumors of our demise have been greatly exaggerated."

In the WSJ's Political Diary today, Naomi Schaefer Riley takes aim at Brandeis, wondering how it can claim that it needs the money for core educational agenda when it spends much money on athletic programs and on dorms that include "a large community space with a big-screen TV and billiards and foosball tables." But if you don't have those things, how do you attract students to attend Brandeis and see the art?

Brandeis is located in Waltham, Massachusetts, less than a thirty minute drive from most of the very fine art museums of Boston. Students have many wonderful opportunities, therefore, to see good art. I wonder instead why the plaintiffs of this lawsuit gave the art to Brandeis.

This is a very old debate among universities and their endowment and alumni boards: To what extent does acceptance of a gift bind the university to cede some of their management rights? Usually these gifts, to the extent there is an obligation on the university, come with an agreement that spells those obligations out. In a moment of stress for any organization that solicits donations -- be it university, symphony, or your local Little League foundation -- there are attempts to move monies to meet existential threats. If the donors didn't spell out that the gifts could not be converted for the university's benefit, then we'd assume that the gifts were meant to benefit the university as they see fit.

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Thursday, September 13, 2007

Stars of the North - Volunteers, American Style 

September 12, I had the privilege of attending a Star of the North awards ceremony for constituents of MN's Second Congressional District. As Representative John Kline said, there are all kinds of people who find a need and out of caring and love, volunteer and find a solution. Because of the selfless acts of so many, his office established a program to honor many of these doers.

Awards were given to 43 people who had done something out of the ordinary, reached out to others or saved a life because of their calm thinking. Honorees included:

A four-year-old boy who saved his mother's life after she had a diabetic attack; he called 911 and forced her to eat Reese Peanut Butter cups to stabilize her sugar.

An 11 year old whose mother collapsed; he called 911 and then got his younger brother and sister into another room, loaded a DVD, told them to stay there; returned to his mom until paramedics arrived. (Both moms are fine.)

A high school girl who launched a drive for prom dresses for victims of Hurricane Katrina.

Lakeville police who raised $50,000 for Special Olympics by jumping into a frozen Lake in January.

Multiple small groups that had fairs, benefit dinners, and other fetes to help families defray large medical expenses.

One woman donated a kidney to a complete stranger. Another child offered her hair to Locks of Love.

Another child has collected pop tops for the Ronald McDonald House.

A senior citizen reads to school children weekly.

Yes, I got an award for my four plus years of shipments to American soldiers in Iraq.

This giving attitude followed with actions is rare, period. In too many places on the planet, the government is the main source of help, not individual citizens. In 2006, a friend of mine had a young adult nephew from Norway visit him. They went to the Science Museum in St. Paul, a place staffed with many volunteers. His nephew asked what a "volunteer" was. My friend explained. The nephew replied, "Oh, we don't do that in Norway, the government takes care of all this." If we let our government take over too much of our society, we too will lose contact with our neighbor; we will lose the incentive and eventually the ability to help friends and strangers in need.

We need to remember: Part of what makes America exceptional are people like these honored tonight. It's these big and little actions that count. Our kind of thinking, generosity, just "do it" attitude is NOT universal but it IS American.

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