should we tax or cap political contributions?

In the spirit of unabashed self-promotion, here is a summary of some of my own research, as it appeared in the University of Miami B-School Buzz:

With the U.S. Supreme Court expected to address campaign finance reform in its next term, new research from Christopher Cotton, an assistant professor of economics, offers fresh insight on the issue. The study uses game theory to compare two reform options: contribution limits and taxing campaign contributions. His conclusion? Taxing campaign contributions is the better solution. The research is published in the August issue of the Journal of Public Economics.

Link to working paper version or final version on journal website.

race and charitable giving

Christina M. Fong (Carnegie Mellon) and Erzo F.P. Luttmer (Harvard) run an experiment to test whether charitable giving to natural disaster victims depends on whether the donor is the same race as the victims. From their paper abstract:

We investigate the role of racial group loyalty on generosity in a broadly representative sample of the U.S. adult population. We use an audiovisual presentation to manipulate beliefs about the race, income, and worthiness of Hurricane Katrina victims. Respondents then decide how to divide $100 between themselves and Katrina victims. We find no effects of victims’ race on giving on average. However, respondents who report feeling close to their racial or ethnic group give substantially more when victims are of the same race rather than another race, while respondents who do not feel close to their group give substantially less.

This means that race does effect individual donations. However, on average, the effects cancel each other out, and no one is made significantly worse or better off from the biases.

The article is forthcoming in AEJ: Applied Economics. Download it here.

donations to universities to help one's child get accepted

Jonathan Meer (Stanford) and Harvey S. Rosen (Princeton) study alumni donations to a university, and show that alumni are more likely to give money as their children approach college age. Their abstract:

We study alumni contributions to an anonymous research university. If alumni believe donations will increase the likelihood of their child’s admission, and if this belief helps motivate their giving, then the pattern of giving should vary systematically with the ages of their children, whether the children ultimately apply to the university, and the admissions outcome. We call this pattern the child cycle of alumni giving. The evidence is consistent with the child-cycle pattern. Thus, while altruism drives some giving, the hope for a reciprocal benefit also plays a role. We compute rough estimates of the proportion of giving due to selfish motives.

So, their story only requires that alumni believe that contributions increase the probability of their children being accepted. Now, I would like to see someone determine whether this belief has support in the data.

Download the article.

blonde and brunette fundraisers

When someone shows up on our doorstep looking for a charitable donation, does our potential donation depend on how attractive the fundraiser is? Does it depend on their hair color?

In a cute little paper published in Economics Letters, Michael Price shows that donations do depend on these factors. The better looking the fundraiser, the more we are likely to contribute. (That result isn't so surprising, given that a number of other papers have found a correlation between earnings and beauty.) He also shows that blondes bring in more than brunettes--even controlling for one's physical attractiveness. This means that the benefits of being beautiful are more significant for blondes than for brunettes. This blonde advantage is driven entirely from the donations of Caucasian households (non-white households display no blond preference).

Download the paper