Do you use a credit card for any purchases or contribute to a retirement account? If so, then you’ve experienced something called an intertemporal choice. An intertemporal choice is one in which the cost and reward occur at different times.
For instance, with a credit card, you swipe your card to get the item you want right now, but you don’t actually pay the cost until you pay your credit card bill a month or so from now.
With a retirement account, however, the money leaves your account now, but you won’t get to experience the rewards of that cost until way down the road when you retire.
In the consumer setting, how intertemporal choices influence behavior is pretty well established, but can we leverage this idea for charitable giving as well?
Here’s what you can expect to take away from this episode…
⦿ An understanding of what intertemporal and time inconsistent choices are
⦿ An understanding of the various types of rewards for charitable giving
⦿ How to leverage intertemporal choices in your nonprofit
SNEAK PEEK AT THE EPISODE…
⦿ [1:56] To begin to tackle this question, the first thing we need to figure out is, for a charitable gift, what is the cost and what is the reward?
⦿ [3:24] She hypothesized that if monthly donors are asked to increase their monthly gift but are given the opportunity to postpone that first increased gift, then more donors will agree to increase their monthly gift.
⦿ [8:02] That means when donors were told their increased monthly gift would not go into effect for 2 months, more donors agreed to increase their gift, and they increased their gift by more dollars than the donors who were told their increased gift would into effect right away.
⦿ [10:25] Now this paper focused on monthly givers, but more recently researchers Andreoni and Serra-Garcia tested this idea of commit now, pay later with one time giving.
⦿ [13:55] Long story short, when they added in publicly sharing donation decisions, they found that giving once again increased, indicating there is some social utility to committing to donate and that this audience effect increases time inconsistency.
⦿ [16:23] These studies are really interesting because they demonstrate there is more to giving than simply feeling good about doing good.
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LINKS MENTIONED IN THIS EPISODE:
⦿ Article: Give more tomorrow: Two field experiments on altruism and intertemporal choice
⦿ Article: Time inconsistent charitable giving
