Monday, March 10, 2008

NY Times: Moneyball and Charitable Giving

Interesting article in the Sunday New York Times Magazine: What Makes People Give?, by David Leonhardt:

What makes people give their money away? [John List and Dean Karlan] considered the usual answers (to make the world a better place, to see your name printed in the back of an annual report and the like) too pat, too simple — and sometimes just wrong. Over the years, whenever one of them asked fund-raisers why they did what they did, the responses were vague and unimpressive. There didn’t seem to be much empirical evidence to support the strategies employed by most fund-raisers. So the two economists wondered whether charities were wasting a lot of effort. ...

For a long time, philanthropy was mostly ignored by social scientists ... Academics, for their part, have come to realize that charities provide an excellent laboratory for studying human behavior ... When charities are designing their donor appeals, they often go by nothing more than a few rules of thumb, some of which may be profoundly insightful and others a good deal less so. ...

As Michael Lewis (a contributing writer for this magazine) explained in his 2003 best seller, “Moneyball,” baseball executives spent years clinging to beliefs that were simply false. Only recently, thanks to the emergence of young executives who insisted on looking at data, had some of the myths been exposed. The research on charitable giving is still in its early stages, but is it possible, I wondered, that fund-raising would also prove to be riddled with inefficiencies? Absolutely, List replied. “I think most fund-raisers are doing this wrong.” ...

Cross-posted on TaxProf Blog.

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