I went to a provocatively-titled Pro Bono Economics lecture this week which asked: “Why do some people give their money away and how can we stop them acting so irrationally?”
During the main part of the lecture the former director of the London School of Economics, Sir Howard Davies, gave the audience an informative and wide-ranging journey through various economists’ theories and reasearch as to why and how people give to charity.
To be honest, it was a somewhat depressing experience. Humans came out as pretty selfish, giving to charity predominantly to gain benefit for themselves, whether by a tax break, showing off their wealth to others or getting a “warm glow” from their actions.
This is perhaps confirmed by the evidence Davies produced that the more information people are given about a charity, the less generous they are with their gift. “When we enter the “deliberative mindset” we become less altruistic,” Davies said. To me this came across as: once we start getting distracted from the initial selfishness of the initial giving process, we start to consider things a bit more carefully and decide that actually we’d better give a bit less after all.
Davies’s conclusion? “Much charitable giving by individuals is not rationally based,” he said.
I have to say, I respectfully disagree. Just because there is evidence to show that people do not all give for the same, rigid set of reasons, as for example, the state might, this does not make their behaviour irrational.
To them, they are behaving in a perfectly reasonable way. They are not giving their hard-earned money away willy-nilly – they are giving for their own reasons, whether that is knowing that the “warm glow” they will get from giving is worth the money, or the satisfaction that attracting a tax break will bring.
This can’t make the practice of fundraising very easy, with so much variance in why people give. But I think that with so much emphasis at the moment on things like ‘impact measurement’, which may well be important for fundraising from trusts or the state, it is important not to forget to appeal to individuals’ more intrinsic reasons for giving. Mentioning impact measurement may well put them into the deliberative mindset that could result in them giving less.