Management Science Review

The value of high-income individuals’ time can make it inefficient to volunteer. The time spent volunteering could be used to increase earnings that are then donated, with the charity benefitting from that donation more than the value of the time. A high-priced consultant sweeping the floors in a soup kitchen could have earned enough to pay for a janitor and much more.

Yet many high-income people do volunteer their time. “Why Do People Volunteer? An Experimental Analysis of Preferences for Time Donations” (Alexander Brown, Jonathan Meer, and J. Forrest Williams, Management Science, 2019, Vol 65, Issue 4) develops and tests a new model of donative behavior that differentiates between giving money and time, allowing individuals to have a specific preference for giving time or money. Earlier models treated both forms of donations as being equivalent in the eyes of the donor. Of course, justifying this model solely by the existence of high-income volunteers is tricky: there are many aspects of volunteering that provide direct benefits to the volunteer. Volunteers can see the grateful faces of recipients of their actions, be recognized for their contributions, and make social contacts.

A laboratory experiment provides a useful environment to control for these other factors. Subjects perform a simple but mundane task to earn money. They can switch back and forth between earning money for themselves or directly earning money for a charity of their choice, using their time to produce value for the charity­­—in essence, volunteering. At the end of the experiment, they can also donate directly to their charity from their personal earnings. By varying the wage rates when subjects earn for themselves or the charity, the authors test the strength of individuals’ preferences for giving time.

The results are striking: subjects in the experiment strongly prefer to donate time rather than money. Even when working for the charity is inefficient (that is, wages when working for the charity are lower than when working for oneself), subjects still spend significant portions of their time working for charity. If, instead, subjects had worked for themselves during that same time interval and then donated their earnings, they would have provided more benefit to the charity at no cost to themselves. Additional investigation confirms this result is due to a preference for volunteering. When individuals are restricted to only give their time or to only donate money after the experiment, donations are significantly higher in the time-only condition.

Taken together, these results suggest that the way individuals think about donating time is inherently different than how they think about donating money. Donors feel better when giving their time and effort than when making a monetary gift, and are more willing to give their time even when the charity would be better off with a monetary donation.

Read the full article at https://pubsonline.informs.org/doi/10.1287/mnsc.2017.2951.

REFERENCE

Brown A, Meer J, and Williams JF (2019). Why Do People Volunteer? An Experimental Analysis of Preferences for Time Donations. Management Science 65(4):1455-1468.

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