Impure Altruism and the Volunteering Puzzle

Abstract

There have been few attempts to model the behavioural microfoundations of charitable giving, particularly with regard to the choice between giving money and volunteering. An hour of a volunteer’s time is usually of a lower worth to the charity than a donation of their hourly market wage. However the aggregate levels of donations of money and time are approximately equal in value– a fact long regarded by economists as the “volunteering puzzle”. To provide a solution to this puzzle, this thesis proposes a theoretical model of pure and impure altruism and confirms its predictions with an experiment. Donors are shown to derive a “warm glow” from volunteering which is greater than the warm glow from monetary donations. The thesis also develops a novel measure to estimate the cost and scale of impure altruism. Approximately two thirds of the utility derived from charitable donations is from impure motivations, and the remaining third is pure. Consistent with this finding, the experiment shows that priming the pure motivations in donors reduces the overall provisioning of charity.