The Prestige Motive for Making Charitable Transfers
Abstract
If people are so self-interested, why do they give their money away to charities? One possibility is that people care about the level of the public good their donations provide. But this is not a good explanation: free-riding typically dominates donating even for people who care a great deal about the good in question, and even in groups that are substantially smaller than those in which people contribute. An alternative explanation for giving is that the benefit comes from the donation itself, not from the good it buys. This idea is ancient. In the Old Testament, God promises those giving to the temple that he will
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