nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒09‒03
two papers chosen by
Maximo Rossi
University of the Republic

  1. Endogenous Group Formation via Unproductive Costs By Jason Aimone; Laurence R. Iannaccone; Michael D. Makowsky
  2. Altruistic Behavior and Habit Formation By Harvey S. Rosen; Stephen T. Sims

  1. By: Jason Aimone (George Mason University); Laurence R. Iannaccone (Chapman University); Michael D. Makowsky (Department of Economics, Towson University)
    Abstract: How and why do groups form? In many cases, group formation is endogenous to the actions that individual members take and the norms associated with these actions. In this paper, we conduct an experiment that allows groups to form endogenously in the context of the classic voluntary contribution mechanism public goods game. We identify unproductive costs – “sacrifice” – as a mechanism for endogenous group formation, a result which is consistent with the “sacrifice and stigma” theory of religious groups. We find that changes in relative prices (between private and public goods) act to screen out free-riders, subjects who choose high-sacrifice groups contribute more to the public good once in these groups, and moderate welfare gains are available to those who voluntarily incur unproductive costs.
    Keywords: Endogenous Group Formation, Laboratory Experiment, Free Riding, Public Goods Game, Voluntary Contribution Mechanism, Sacrifice, Unproductive Costs.
    JEL: C92 D71 H41 Z12
    Date: 2010–08
    URL: http://d.repec.org/n?u=RePEc:tow:wpaper:2010-15&r=ltv
  2. By: Harvey S. Rosen (Princeton University); Stephen T. Sims (STS Associates)
    Abstract: This paper examines whether altruistic behavior is habit forming. We take advantage of a data set that includes a rich set of information concerning individuals’ donations of cash and time as adults as well as information about whether they were involved with charitable activities when they were young. The basic premise is that if altruistic behavior when young is a good predictor of such behavior in adulthood, then this is consistent with the notion that altruistic behavior is habit forming. Using U.S. data, we examine both donations of money and time, and find that engaging in charitable behavior when young is a strong predictor of adult altruistic behavior, ceteris paribus. A major issue in the interpretation of this result is that the correlation between youthful and adult altruistic behavior may be due to some third variable that affects both. While it is impossible to rule out such a possibility, we are able to control for family influences that likely could affect lifetime attitudes toward altruism. We find that, even taking this factor into account, altruistic behavior as a youth plays a significant role in explaining adult behavior. This result applies to donations of money and time to a variety of types of non-profit organizations.
    Keywords: altruistic behavior, donations, nonprofit fundraising
    JEL: D19 D83 L31
    Date: 2010–07
    URL: http://d.repec.org/n?u=RePEc:pri:cepsud:1244&r=ltv

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