BLANCO-DALTON - Who Is The Most Generous With The Most Needy 200419

Who is more Generous with the Most Needy?
Experimental Evidence from Bogotá Stratification
Mariana Blanco Patricio S. Dalton

Universidad del Rosario Tilburg University, CentER, CAGE
FCE - UNC
Abril 2019
Blanco & Dalton (2019) Generosity and Socioeconomic Status 1 / 38

Motivation
Charitable giving is an increasing important economic activity around

the world.
In 2014, the Americans gave US$ 358.38 billion (2.1% of the US GDP).
In 2015, a third of the world’s population have given money to charity.

Motivation

the world.
Large amount of literature about charitable giving.

No clear understanding of the relationship of income and wealth with
giving.

Motivation

the world.
Large amount of literature about charitable giving.

No clear understanding of the relationship of income and wealth with
giving.
Little is known about charitable giving in developing countries.

Motivation
Mixed evidence relating income and wealth with giving
Administrative or survey data for the US:

Auten et al (1997) - Administrative data: Positive correlation
Schervish & Havens (1998) - Survey data: Flat relationship
Andreoni (2006): U-shape
Data from the lab:
Eckel et al (2007): The experimental endowment does not affect the
probability to give. Positive correlation between experimental
endowments and the amount of giving to charity
Erkal et al (2011): Inverted U-shape between experimental earnings
and the probability to giving to other participant
Andreoni & Vesterlund (2001): No relationship
Tonin & Vlassopoulos (2013): No correlation between experimental
earnings and giving to charity
Field Experiment:
Andreoni et al (2017): No correlation between income and prosocial
behavior.
Motivation
Concerns about administrative/survey data
Difficult to identify the relationship between wealth and giving.
Measurement errors in self-reported income and self-reported giving

(may differ across wealth).
Different tax incentives: Charitable giving is deduced from taxable

income. The price of giving is lower the richer you are.

Motivation
Difficult to identify the determinants of the wealth/income−giving

relationship

Motivation

relationship
Different absolute income? The rich have more income to donate

Motivation

relationship
Different information? The rich may be better informed about the
charity and how it works

Motivation

relationship
Different weight to self-image? The rich may be more prone to
donate to improve self-image (particularly if they know they are
observed)

Motivation

relationship
observed)
Different transaction costs? The rich may have better access to
the donation points (e.g. internet)

Motivation

relationship
observed)
Different beliefs? The rich may have different beliefs about
deservedness (effort-luck), success alone or with help, etc.

Motivation

relationship
observed)
Different beliefs? The rich may have different beliefs about
deservedness (effort-luck), success alone or with help, etc.
Different preferences? Are the rich more altruistic?
Motivation
Concerns about income distributions generated in the lab
External validity of the artificially generated income distribution in

the lab? Suitable to study income elasticity of giving, but not enough
to study giving behaviour across people from different socio-economic
stratum.
Wealth and socio-economic stratum include dimensions that are not

captured by the income distribution created in the lab (i.e.
discrimination, beliefs, opportunities, preferences, etc).
People’s real (rather than artificial) position in the income distribution

may shape their preferences, beliefs and information which in turn
may determine charitable giving.

Our contribution
Take advantage of a unique feature of Colombia
observe giving behavior in a controlled environment, rather than

self-reported.
to a real charity helping the most needy, rather to other subjects

in the lab
observing real wealth, rather than self-reported or wealth created in

the lab.

How we account for (or rule out) different possible
explanations?
Taxes incentives by not giving proof of donations (so it cannot be

used for tax refunds)
Information asymmetries by providing same information to people
about the Charity
Self-image by a double-blind design (donations are truly anonymous).
Transaction costs as the donations are requested in the University
where the subjects study.
Measurement errors by using an objective proxy of income/wealth.
Beliefs by elicitation with a post-experimental questionnaire.

Colombia - Social Stratification by Law
All cities in Colombia are divided in 6 strata defined by law.
The stratification policy was made into law in 1994 to grant subsidies
to the poorest residents.
People living in upper layers (strata 5 and 6) pay higher electricity,

water and sewage rates to subsidise lower strata.
Unique identification: No need to rely on self-reported income or to

induce a fictitious income distribution.

Strata distribution across Bogotá

The Strata in images - Bogotá
Stratum 2 Stratum 6

Strata, income and expenditure
Survey data for Bogotá (2011)
3000
2500
2000
1500
1000
500
0
2 3 4 5 6
-500
Income per capita Expenditure per capita
Source: Gallego et al. (2015)

The Charity
Non-profit that builds houses for the homeless.

Mainly present in Latin America & the Caribbean.
Run by young people (age limits for participation).
To date over 4,856 houses has been built across Colombia.

Experiment 1: Design
Double-blinded dictator game with TECHO as recipient.

Recruiting e-mail.
Fill in a survey: identification of stratum and other individual
characteristics
When entering the lab participants receive:
an envelope marked inside according to their strata (Envelope D).
a blank envelope (envelope M),
the equivalent to US$10 in bills of US$1,
as many blank papers of the size of the bills as bills received and
a letter with information about TECHO.

Experiment 1: Decision
Distribute bills of US$1 and blank papers between envelope D and M.

Each envelope had to have same number of bills + blank papers.
Keep the envelope M.
Complete a questionnaire and put it in a new blank envelope.
Put together both envelope D + Envelope with questionnaire into an
urn.

Experiment 1: Sample
210 students
2 universities
11 sessions, ≈ 30-40 minutes
Average earning: US$ 6.83

Stratum 1 2 3 4 5 6
Experiment 1 1 18 50 47 58 36

Do strata really identify income/wealth?
Financing tuition
0,80
0,60
0,40
0,20
0,00
2 3 4 5 6
Outside family (loan/scholarship) Family funds

Property ownership by stratum
1.00#
0.80#
0.60#
0.40#
0.20#
0.00#
2# 3# 4# 5# 6#
0+1# 2+3#

Table: Individual characteristics and strata ranges

Strata range: Low Middle Top Fisher’s exact test
Father’s education 2.444 3.063 3.723 (p=0.00)***

(0.511) (0.971) (1.239)
Mother’s education 2.556 2.907 3.426 (p=0.00)***
(0.784) (0.990) (1.112)
Father’s employment 0.833 0.794 0.798 (p=1.00)
(0.383) (0.407) (0.404)
Mother’s employment 0.778 0.784 0.606 (p=0.02)**
(0.428) (0.414) (0.491)
Student’s employment 0.111 0.206 0.266 (p=0.32)
(0.323) (0.407) (0.444)
Origin of funds 1.444 2.134 2.426 (p=0.00)***
(0.616) (0.671) 0.664)
Property owners 0.667 1.423 2.053 (p=0.00)***
(0.840) (0.966) (1.009)
Car owners 0.778 1.072 1.840 (p=0.00)***
(0.943) (0.904) (0.942)

Experiment 1: Results
Average Donation by Stratum
1
.8
.6
.4
.2
0
2 3 4 5 6
Strata
Experiment 1

We ran three regressions:
Donationi = α + βStratai + X1i 0 γ1 + X2i 0 γ2 + X3i 0 γ3 + ε i (1)
Donationi =α + β 1 Stratum 2i + β 2 Stratum 3i + β 3 Stratum 4i + β 4 Stratum 5i + (2)

+ X1i 0 γ1 + X2i 0 γ2 + X3i 0 γ3 + ε i
Donationi = α + β 1 Low Classi + β 2 Middle Classi + X1i 0 γ1 + X2i 0 γ2 + X3i 0 γ3 + ε i (3)

Dependent variable: Proportion of Endowment donated to Techo

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Strata 0.039*** 0.032** 0.035** 0.039**

(0.015) (0.016) (0.016) (0.018)
Stratum 2 -0.175** -0.154* -0.199*** -0.193**
(0.078) (0.081) (0.072) (0.079)
Stratum 3 -0.141** -0.119* -0.096 -0.104
(0.057) (0.061) (0.062) (0.070)
Stratum 4 -0.113* -0.092 -0.107* -0.072
(0.061) (0.064) (0.062) (0.071)
Stratum 5 -0.097 -0.089 -0.081 -0.053
(0.060) (0.061) (0.060) (0.066)
Poor class -0.115* -0.098 -0.148** -0.160**
(0.067) (0.070) (0.062) (0.068)
Middle class -0.068* -0.049 -0.051 -0.054
(0.037) (0.041) (0.041) (0.046)
Constant 0.155** 0.224 -0.044 0.100 0.419*** 0.458** 0.182 0.346 0.360*** 0.372* 0.100 0.256
(0.061) (0.200) (0.226) (0.244) (0.049) (0.206) (0.255) (0.274) (0.029) (0.197) (0.233) (0.247)
Individual characteristics X X X X X X X X X
Participation in Techo X X X X X X
Beliefs X X X
Observations 209 209 195 180 209 209 195 180 209 209 195 180
R-squared 0.034 0.048 0.119 0.164 0.041 0.053 0.128 0.167 0.024 0.040 0.117 0.161
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

Conclusion from Experiment 1
Amount donated increases with wealth
But... Are the rich intrinsically more generous?

or
Is it that the cost of giving is lower for them?

IDEM Experiment 1 but...

3 different endowments in random order (≈ 10, 18 and 25 USD).
Endowments = per capita daily expenditure of households in stratum
2, 4 and 6.
Strategy method: after all decision are made and envelopes sealed,
each participant rolls a dice to determine the decision that will be
paid out.

Stratum 1 2 3 4 5 6
Experiment 1 1 18 50 47 58 36
Experiment 2 1 24 40 42 43 16

Experiment 2 replicates Experiment 1
Average donation by stratum
Donations with endowment of USD 10 in Experiment 2 = donations in

Experiment 1
1
.8
.6
.4
.2
0
2 3 4 5 6
Strata
Experiment 1 Experiment 2
Replication test
OLS regressions using strata-equivalent endowment
Dependent variable: Proportion of relevant endowment donated to Techo

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Strata 0.019 0.015 0.014 0.014

(0.017) (0.016) (0.018) (0.019)
Stratum 2 -0.035 -0.030 -0.032 -0.033
(0.088) (0.081) (0.091) (0.090)
Stratum 3 -0.034 -0.020 -0.044 -0.058
(0.076) (0.070) (0.071) (0.072)
Stratum 4 0.049 0.060 0.048 0.024
(0.078) (0.075) (0.074) (0.073)
Stratum 5 0.034 0.028 0.002 -0.003
(0.082) (0.077) (0.080) (0.078)
Poor class -0.060 -0.050 -0.033 -0.030
(0.065) (0.061) (0.076) (0.076)
Middle class -0.016 0.000 0.007 -0.007
(0.043) (0.043) (0.045) (0.046)
Constant 0.231*** -0.029 -0.308 -0.297 0.298*** 0.022 -0.242 -0.213 0.322*** 0.042 -0.261 -0.242
(0.066) (0.178) (0.246) (0.271) (0.070) (0.201) (0.251) (0.278) (0.036) (0.194) (0.253) (0.279)
Beliefs X X X
Observations 165 165 142 137 165 165 142 137 165 165 142 137
R-squared 0.009 0.085 0.111 0.122 0.022 0.099 0.126 0.132 0.006 0.085 0.109 0.119
Robust standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

Generosity is the same across strata

Generosity is the same across strata
Do people from different strata differ in their motivations to give?

IDEM Experiment 2 but...

We match donations at a 1:1 ratio.
This experiment was ran only at one university.

OLS regressions comparing matching with no matching
Dependent variable: Amount donated to Techo

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Strata 0.026 0.026 -0.002 -0.006

(0.030) (0.029) (0.033) (0.035)
Stratum 2 -0.041 -0.030 0.068 0.061
(0.114) (0.112) (0.145) (0.149)
Stratum 3 -0.026 -0.038 0.008 0.014
(0.062) (0.061) (0.062) (0.067)
Stratum 4 0.086 0.082 0.116* 0.089
(0.069) (0.069) (0.069) (0.071)
Poor class 0.002 0.010 0.098 0.092
(0.104) (0.100) (0.125) (0.128)
Middle class 0.048 0.039 0.070 0.058
(0.054) (0.053) (0.053) (0.056)
Matching 0.013 -0.001 -0.127 -0.163 0.074 0.058 0.076 0.069 0.058 0.044 0.046 0.037
(0.149) (0.145) (0.160) (0.164) (0.071) (0.070) (0.071) (0.072) (0.062) (0.060) (0.062) (0.065)
Strata×Matching -0.001 0.000 0.030 0.039
(0.039) (0.037) (0.040) (0.041)
Stratum 2×Matching -0.013 -0.024 -0.110 -0.110
(0.140) (0.134) (0.162) (0.162)
Stratum 3×Matching -0.089 -0.079 -0.160* -0.174*
(0.094) (0.092) (0.087) (0.090)
Stratum 4×Matching -0.130 -0.116 -0.116 -0.094
(0.095) (0.097) (0.101) (0.102)
Poor class×Matching -0.033 -0.042 -0.110 -0.116
(0.127) (0.120) (0.141) (0.141)
Middle class×Matching -0.094 -0.084 -0.107 -0.103
(0.077) (0.076) (0.079) (0.081)
Constant 0.184 0.274* 0.069 0.166 0.264*** 0.344** 0.001 0.088 0.248*** 0.305* -0.030 0.067
(0.112) (0.142) (0.166) (0.177) (0.054) (0.169) (0.190) (0.222) (0.046) (0.162) (0.187) (0.214)
Beliefs X X X
Observations 159 159 141 134 159 159 141 134 170 170 152 145
R-squared 0.014 0.049 0.128 0.149 0.043 0.079 0.181 0.191 0.009 0.046 0.125 0.140
Robust standard errors in parentheses. Using only observations from Universidad del Rosario
*** p<0.01, ** p<0.05, * p<0.1

Weak evidence of warm-glow ONLY for stratum 3.

Weak evidence of warm-glow ONLY for stratum 3.
We can claim that all other strata mainly give motivated by pure
altruism.

Within-subject Analysis - Experiment 2
Proportion of endowment donated by stratum
Proportion of endowment donated by strata

Same Increasing Decreasing Others
proportion proportion proportion
Low class 0.02 0.04 0.01 0.08
Middle class 0.02 0.10 0.07 0.31
High class 0.02 0.07 0.09 0.17
Cumulative 0.06 0.21 0.17 0.56

Proportion of endowment donated by stratum
1
.8
.6
.4
.2
0
10 USD 18 USD 25 USD
Endowment
Strata 2
1
1
.8
.8
.6
.6
.4
.4
.2
.2
0
0
10 USD 18 USD 25 USD 10 USD 18 USD 25 USD
Endowment Endowment
Strata 3 Strata 4
1
1
.8
.8
.6
.6
.4
.4
.2
.2
0
10 USD 18 USD 25 USD 10 USD 18 USD 25 USD

Endowment Endowment
Strata 5 Strata 6

Proportion of endowment donated by class

Same Increasing Decreasing Others
proportion proportion proportion
Low class - 0.05 0.05 0.14
Middle class 0.06 0.10 0.11 0.18
High class 0.02 0.05 0.07 0.17
Cumulative 0.08 0.20 0.23 0.49

1
1
.8
.8
.8
.6
.6
.6
.4
.4
.4
.2
.2
.2
0
0
10 USD 18 USD 25 USD 10 USD 18 USD 25 USD 10 USD 18 USD 25 USD
Endowment Endowment Endowment
Low class Middle class High class

Conclusion
We identify socio-economic status without relying on artificially

induced distribution or self-reported data.
No difference across strata in the amount donated, once we account
for differences in income.
We control for information about the charity, personal characteristics,
beliefs about why people is poor, so we are only left out with the
preference channel.
We rule out that donations are motivated by warm-glow for all strata
but for stratum 3. Warm-glow motivations do not differ sharply
across strata.
The rich are not more generous than the poor, they just have more
money and that is why they donate more.

Experiment 1 Experiment 2 p-value
Full sample 0.318 0.307 0.5952
(0.257) (0.262)
Stratum 2 0.244 0.262 0.8261
(0.262) (0.268)
Stratum 3 0.278 0.255 0.5339
(0.207) (0.2025)
Stratum 4 0.306 0.317 0.7113
(0.246) (0.239)
Stratum 5 0.322 0.358 0.7656
(0.266) (0.310)
Stratum 6 0.419 0.331 0.3076
(0.296) (0.298)
Experiment 2

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Who is more Generous with the Most Needy?

Experimental Evidence from Bogotá Stratification

Mariana Blanco Patricio S. Dalton

Blanco & Dalton (2019) Generosity and Socioeconomic Status 1 / 38

Charitable giving is an increasing important economic activity around

Blanco & Dalton (2019) Generosity and Socioeconomic Status 2 / 38

Charitable giving is an increasing important economic activity around

Large amount of literature about charitable giving.

Blanco & Dalton (2019) Generosity and Socioeconomic Status 2 / 38

Charitable giving is an increasing important economic activity around

Large amount of literature about charitable giving.

Blanco & Dalton (2019) Generosity and Socioeconomic Status 2 / 38

Administrative or survey data for the US:

Difficult to identify the relationship between wealth and giving.

Measurement errors in self-reported income and self-reported giving

Different tax incentives: Charitable giving is deduced from taxable

Blanco & Dalton (2019) Generosity and Socioeconomic Status 4 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

Blanco & Dalton (2019) Generosity and Socioeconomic Status 5 / 38

Difficult to identify the determinants of the wealth/income−giving

External validity of the artificially generated income distribution in

Wealth and socio-economic stratum include dimensions that are not

People’s real (rather than artificial) position in the income distribution

Blanco & Dalton (2019) Generosity and Socioeconomic Status 6 / 38

Take advantage of a unique feature of Colombia

observe giving behavior in a controlled environment, rather than

to a real charity helping the most needy, rather to other subjects

observing real wealth, rather than self-reported or wealth created in

Blanco & Dalton (2019) Generosity and Socioeconomic Status 7 / 38

Taxes incentives by not giving proof of donations (so it cannot be

Blanco & Dalton (2019) Generosity and Socioeconomic Status 8 / 38

All cities in Colombia are divided in 6 strata defined by law.

People living in upper layers (strata 5 and 6) pay higher electricity,

Unique identification: No need to rely on self-reported income or to

Blanco & Dalton (2019) Generosity and Socioeconomic Status 9 / 38

Blanco & Dalton (2019) Generosity and Socioeconomic Status 10 / 38

Blanco & Dalton (2019) Generosity and Socioeconomic Status 11 / 38

Income per capita Expenditure per capita

Source: Gallego et al. (2015)

Blanco & Dalton (2019) Generosity and Socioeconomic Status 12 / 38

Non-profit that builds houses for the homeless.

Blanco & Dalton (2019) Generosity and Socioeconomic Status 13 / 38

Double-blinded dictator game with TECHO as recipient.

Blanco & Dalton (2019) Generosity and Socioeconomic Status 14 / 38

Distribute bills of US$1 and blank papers between envelope D and M.

Blanco & Dalton (2019) Generosity and Socioeconomic Status 15 / 38

Blanco & Dalton (2019) Generosity and Socioeconomic Status 16 / 38

Blanco & Dalton (2019) Generosity and Socioeconomic Status 17 / 38

Outside family (loan/scholarship) Family funds

Blanco & Dalton (2019) Generosity and Socioeconomic Status 18 / 38

Blanco & Dalton (2019) Generosity and Socioeconomic Status 19 / 38

Table: Individual characteristics and strata ranges

Father’s education 2.444 3.063 3.723 (p=0.00)***

Strata 0.039* 0.032 0.035 0.039