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Thursday, December 19, 2019

OF CHARITY & EXPERIMENTAL ECONOMICS: A SURPRISING SCIENCE XMAS TALE! (Pt1)

Keywords: charity, Christmas, economics, experimental economics, Xmas

Hooooo-ho-hooooo, hello dear English speaking-reading-hearing listener, welcome back to me, @sciencemug, the blog/podcast/twitter&instagram accounts/entity behind the unsuccessful e-shop stuffngo on zazzle.com which tells you Christmas science stories while daring Rudolph, the Red-Nosed Reindeer, to hide Santa’s GPS one minute before the midnight on Xmas eve just to see what happens, aaand which talks to you thanks to the voice, kidnapped via a voodoo-wireless trick, from a veeery very very dumb human.
Aaand which does all of this in Eng?ish, a language that is to proper English what a Christmas with your family is to an experience absolutely totally 1000% stress free.

Today I'm gonna tell you a tale about charity, experimental economics and Christmas! (Ok, ok, not quite hard science, I agree, but still, there's the scientific method and some statistics...)  


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Two researchers of the German University of Gottingen, Dr. Stephan Muller and Professor of Experimental Economics Holger A. Rau (aka the Rau's Duo, or the RDs), investigate whether people propensity to donate money to charity vary according to the time of the year. The two scholars get to a surprising conclusion (you’ll understand why and how surprising, dear reader, along the way of my tale) and the research duo then publishes its findings in a paper (P) on the open access scientific journal PLOS ONE.

Sooo, dear reader, statistics say that, in the United States, more than one third (33.6%) of the annual donations are
made in what is called the “giving season”, that is the part of the year between Thanksgiving (which, in the US, is celebrated on the fourth Thursday of November) and Christmas. More precisely, a big chunk of such donations (17.5%) happens in December. Even donations in churches and tips in restaurants are fatter on Christmas and surroundings… (P)

It comes with no surprise, then, that most of the charity campaigns be organized during such holiday time.

But why is all of this really so?

I mean, it is been proven that tips spike during holidays not as a consequence of a universal burst in generosity, but only ‘cause of who’s already a good tipper (1). So maybe also donations in churches rise at Christmas (and Easter) only ‘cause more people go to church that day(s), not ‘cause they get more altruistic, aaaaand maybe donations in general too increase at Xmas simply ‘cause at Xmas time folks are asked more often to give ooor ‘cause of the tax incentives… I mean, dear reader, who really knows?

Weeeell pal, I’ll tell you who really knows, professor Rau and his colleague do! The Rau’s Duo’s investigation is in fact aimed to find precisely an answer based on data to the question: “Is it that more money is collected in the Christmas season solely, because of higher fundraising activity? Or is it that during this time people generally give more?(P)

So to answer to this question the RDs set up two studies.
The first one is based on two experiments

Now now, dear reader, at this point I’m sure you’re gonna say: “ohi you, dumb blog, how is an experimental economics, well, experiment programmed exactly? Do the researchers get an epiphany after a 72 hours straight Monopoly marathon? And how experimental economics researchers find their human-experimental-economics-guinea pigs? Do they lurk for preys in the dark corners nearby the places where there’re the meetings of the ASFSSC (the Anonymous Self-Facepalming Spendthrifts & Shameless Cheapskates)?”

Weeell pal, I can tell ya this: the RDs plan their experiments thanks to a software package: the Zurich Toolbox for Readymade Economic Experiments, the z-Tree, a tool that allows the development and implementation of economic experiments also for people who have no programming experience. (2)

As for the subjects selection process, well, professor Rau and his colleague recruit them with the Online Recruitment System for Economic Experiments, the ORSEE (3). The ORSEE is a data-base tool that basically takes care of the mental health of poor underpaid over-stressed research assistants sparing them from what happened in the past, that is from having to run across the university to get to people individually and stalk them into signing-up some paper list and from the necessity of giving away tons of leaflets, and/or from filing Excel sheets with gazillions of names coming from mailing lists. In plain words, dear reader, the ORSEE simplifies the organization of the experiments, cuts their costs, provides full information about the participants (preventing, like that, that, for instance, the same person take part to an experiment multiple times), aaand gives the researchers the exact number and typology of subjects they need. (3)

Merry Post (Merry Christmas) by @sciencemug
Merry post! by @sciencemug

Soo, dear reader, now you know how the Rau’s Duo planned its experiments and selected the subjects.

Ooook, now, as said before, our fine researchers perform a couple of studies.

The first study is based on two experiments: experiment one is performed during summer (on June), and experiment two during Christmas time (on the last week of November and on December). The subjects of these experiments are all recruited at the Gottingen University.

For the summer experiment the RDs enroll 72 people: 40 females and 32 males between 18 and 33 years old, with a mean age of 24.
The Xmas/winter experiment, instead, involves 94 subjects: 49 females and 45 males between 18 and 49 years old, with a mean age of 24.

Each experiment lasts one hour, all participants know that the data they generate will remain anonymous, none of the subjects of the winter experiment has taken part to the summer one, none of the subjects of both experiments has been previously involved in other donation-charity studies.

Sooo, dear reader, both summer and Xmas experiments start with the experimenters giving subjects money: 100 Talers. What? You never heard of the Taler?! Well, dear reader, Taler’s the official currency of The Experimental Economics Republic of Rau’s Duo’s Researchland where 10 Talers equal to 1 Euro or, at present, 1.11 US Dollars. Maybe you think this currency name come form Richard H. Thaler -aaaah nomen omen!- who’s won, in 2017, the Nobel Prize in, guess what? Yup dude: Economic Sciences, for investigating how economic decisions be affected by the human beings’ psyche, in particular by “the tendency to not behave completely rationally, notions of fairness and reasonableness, and lack of self-control” (see)… Anyway dear reader, that's not it. The Rau’s Duo’s Taler comes (at least this is my educated guess) from the Thaler, the German coin. The story goes like that: in Boemia (Western Czech Republic) there were the silver mines of Joachimsthal, and there a coin named Joachimsthaler is created, then Thaler, from which, eventually, the word Dollar comes from (see). There you go buddy, a lot of of slightly useful totally off-topic information all for you.

Aaaaanyway, dear reader, let’s go back on track: Rau’s Duo, study one, summer and Christmas experiments.

Experimenters give each subject 100 Talers (that is 10 Euros).
Then the experimenters say to the subject: “Ok mate, now you must give away all your 100 Taler, for real. You have only two possible recipients for the money: the German Red Cross, aaaand yourself. You can only split integers (from 0 to 100), your decision will stay anonymous, and the money will be transferred to the Red Cross and to you after the end of the experiment”.

So now the subject decides the amount of his/her money (even all or none of it) to keep, and the amount to donate to the German Red Cross, that is to charity.
Once this decision is taken, the experiment proceeds with the Rau’s Duo’s evaluation of the subject’s Social Value Orientation (SVO).
The Social Value Orientation is “the magnitude of the concern people have for others” (see), and the RDs measure that of each subject with a test.
The instructions of this SVO test say: “Subject, let’s begin. Ready? Recite your baseline. Cells. Have you ever been in an institution Cells. Do they keep you in a cell? Cells. When you're not performing your duties do they keep you in a little box? Cells. Someone gives you a calfskin wallet for your birthday. How do you react?”… Oops, hehe, sorry reader, wrong tests.
Let’s try again.

Social Value Orientation (SVO) Test/Baseline Test according to @sciencemug
Social Value Orientation (SVO) Test/Baseline Test according to @sciencemug

The Social Value Orientation test instructions say: “Hi subject, we’re the SVO test instructions. Ok subject, this is the scenario you have to imagine: you and another dude have been randomly matched. You two don’t know, or will ever know, each other. Both of you will make decisions by choosing one among the numbers 1, 2 or 3. Your decisions will result in points assigned to you and the dude. Same goes with dude’s decisions. Each point counts. The more points you get the better for you, the more points the dude gets, the better for the dude.

Now, subject, here’s an example: 
If you choose the number 1, you get 500 points and the dude 100.
If you choose the number 2, you get 500 points and the dude 500.
If you choose the number 3, you get 550 points and the dude 300.

As you can see, subject, your decision affects not only the amount of points you get, but also the amount of point the dude gets. And, of course, it’s the same for the dude’s decision.

Stay cool, subject, there’s no wrong or right answer.

Now, subject, decide: take the red pill or the blue one… Hem no no, sorry subject, got a bit carried away…
What I meant to say was: now subject, let’s start the test, you have a total of 8 decisions to make like the one of the example.
SVO test instructions out!”

So the subjects do the test, and, according to the results, they are classified as “Prosocial”, “Individualistic” or “Competitive”.
In short, dear reader, the prosocial type is the kind that, in the example above, chooses the number 2, meaning that he/she chooses to assign to himself/herself the same amount of points of the other dude.
The individualistic type chooses the number 3, that is to get for him/her the highest amount of points possible.
The competitive type chooses the number 1, that is he/she makes the choice that makes the other dude getting the lowest amount of points possible.

Now professor Rau and his colleague classify each subject of the summer and Christmas experiments as prosocial, individualistic or competitive according to the most often chosen answer, provided that the subject give “at least five times the answer which corresponds to the same social type.(P)
Once done with the screening of the test results, the RDs exclude the subjects that do not fall under any classification and the competitive ones, and then use only the prosocials and individualists data. Eventually the RDs end up using the data of 156 subjects: 97 prosocials and 59 individualists.

Aaaaaand at this point, dear reader, after the German Red Cross dilemma and the Social Value Orientation test and screening, the summer and Xmas experiments are officially done!
Now, now, let’s see the results of these two experimental economics experiments, ok dear reader?
But first, pal, first, a message to inform you about the Christmas charity initiative this dumb blog supports. 


In the Holiday season, every year, the colorful lights, the sparkling decorations, the corny Christmas carols and their over-enthusiastic fans with their quite frankly unsettling over-sized smiles, hide an untold gritty drama. Thousands of ugly Xmas-gift-sweaters have to face the consequences of the unconfessed rejection of their recipients and end up locked up in the darkest corners of the closets, or boxed up on a shelf in cold garages, with the sole company of a very old mothball with its pathetic tales about its glorious past of fights against the moths and some melancholic Hawaiian shirt bought on vacation after five Margaritas and half a bottle of Tequila and soon forgotten once home.
 
Ugly G. Sweaters (aka Mr. Ref) by @sciencemug
   
So this Holiday season, give a chance of happiness to ugly-sweaters and make a donation to the USFFUSAONCPNRL, the Ugly Sweater Foundation For Ugly Sweaters And Other Nasty Christmas Presents Nobody Really Likes. 
With your donation you won’t actually do anything good, but at least some new mothballs will be bought and maybe a new light bulb for that dark closet. 


So dear reader, what does the Rau’s Duo find out with its summer and Christmas experiments?
Well, the researchers find something utterly unexpected.

The summer donations to the Red Cross are higher than the Xmas ones.

In short, the percentage of the 100 Talers the subjects had as a budget that they choose to allocate to the Red Cross (namely the average percentage of donations to charity) is in fact 27% in summer, while it drops to 19% at Xmas. This means, dear for sure surprised reader, that the subjects’ propensity to donate in the Christmas season is lower by about 30% than that of the summer.

Analyzing more in details the data, then, the Rau’s Duo finds out something even more puzzling.

While indeed, in summer, prosocials give almost three times more than individualists (35% of the 100 Talers budget versus 12%), well dear reader, in the Christmas season prosocials donate basically half of what they donate in summer, and even a bit less than individualists (18% prosocials, 21% individualists).

The Rau’s Duo, then, concludes that the seasonal drop in donations “is driven by prosocials who show a more pronounced [negative] reaction to the Christmas season(P).

Moreover the researchers find that “the fraction of prosocials which makes a zero contribution is significantly higher in the [Xmas season] (35%) compared to the summer data (9%)” (P) and that the prosocials who make a non-zero contribution anyway donate less in the Christmas season than in summer (29% vs 35%). 

To sum up, then, dear reader, at Xmasprosocials are not only less likely to give [...] they also give less.(P)

So all in all, dear reader, these findings are definitely counter-intuitive and surprising, since prosociality is one of the main factors that drives charitable giving (4), and Christmas time is supposed to be that time of the year when everybody try to be a better version of him/herself and, therefore, should be more generous .

Weeell, dear reader, these are the not anticipated results professor Rau and his colleague come up at the end of their first study, which they do to learn about the “seasonal effects in charitable giving (P). But our Experimental Economic researchers want to go deeper into the matter, thus, as said before, they perform a second study to try and understand the reason why prosocials during the Christmas season donate much less than in the summer.

But for this Holiday answer, dear reader, you’ll have to wait for the final part of this Xmas post (that probably will become a Happy New Year post)!

Till next time, then pal, and in the meanwhile enjoy your eggnog, maybe make a donation to me, and merry Christmas!



Bibliography
The paper the post is about
P - Müller, S., and Rau, H.A. (2019). Too cold for warm glow? Christmas-season effects in charitable giving. PLOS ONE 14, e0215844.

References
1- Greenberg, A.E. (2014). On the complementarity of prosocial norms: The case of restaurant tipping during the holidays. Journal of Economic Behavior & Organization 97, 103–112.
2- Fischbacher, U. (2007). z-Tree: Zurich toolbox for ready-made economic experiments. Exp Econ 10, 171–178.
3- Greiner, B. (2015). Subject pool recruitment procedures: organizing experiments with ORSEE. J Econ Sci Assoc 1, 114–125.
4- Bekkers, R., and Wiepking, P. (2010).
A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms That Drive Charitable Giving. Nonprofit and Voluntary Sector Quarterly.

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