This dissertation consists of three essays on the economics of charitable giving. In the first essay, I investigate the effect of charitable solicitations on giving behavior. People are more likely to contribute to a charity when they are asked to. Although this so-called ‘power of asking' is well-known among fundraisers, the existing literature does not pay much attention to the role of donation requests in charitable giving. I use a unique data set of charitable activity in the United States to estimate the causal effects of charitable solicitations on both the propensity to give and the amount of charitable contributions. In order to address the endogeneity of the donation requests due to non-random solicitation of charitable donors, I link this data set to IRS data on charitable organizations and propose identifying instruments. After controlling for the endogeneity, I find that donation requests increase the propensity to give by about nineteen percentage points for those who are asked to give. This effect is robust under different specifications and with different sets of instruments, and is much larger than the estimates from univariate models, which assume that charitable solicitations are exogenous. I argue that this result may be associated with donor fatigue. Furthermore, I document that some identifiable characteristics of individuals are associated with a higher probability of being solicited. In particular, income, age, education, and race play significant roles in explaining the selection of potential charitable donors.
In the second essay, I investigate the effect of gender differences and household bargaining on giving behavior. I replicate the study of Andreoni, Brown, and Rischall (2003) using a different data set - recently available Panel Study of Income Dynamics (PSID) supplement on charitable giving - and provide several robustness checks to test the sensitivity of their results to inclusion of alternative control variables, possible selection bias problems, and endogeneity of the tax price of giving. First, focusing on single-person households, I document that males' and females' tendencies toward giving are significantly different, in particular, when different categories of giving are considered. Next, I investigate how this difference affects giving by married couples. Comparing households in which husband and wife make a joint decision on allocating money to charities with those in which wife or husband is the sole decisionmaker or couples make separate decisions reveals that bargaining over giving significantly increases the amount of charitable contributions, even after controlling for self-selection into different modes of household decisionmaking. Furthermore, I find that wives' preferences are mostly dominant in household bargaining over the amount of charitable gifts and that the bargaining increases giving by almost seven percent. This result not only highlights the positive effect of household bargaining over charitable gifts but also provides new evidence for the effects of assortative matching and other demographic characteristics on charitable giving.
The third essay develops a simple spatial model of fundraising in which charities select a target population to solicit donations. First, we show that in a competitive charity market without any intervention, the number of charities in the market and (or) overall net funds raised by charities may be sub-optimal. Next, we analyze whether a social planner can prevent such shortcomings and show that simple regulatory powers suffice to achieve socially optimal outcomes. This paper's contributions are both descriptive and normative. As a descriptive contribution, it introduces a model in which some donors are solicited by multiple charities, which results in excessive fundraising. As a normative contribution, in contrast to the previous literature, this model does not necessarily produce monopoly as the optimal market structure. We show that if fixed costs associated with establishing charities are sufficiently low, then the optimal market structure is not a monopoly. Given the importance of the trade-off between the volume and variety of charitable services, we argue that this result may be of particular interest to policy makers.