Family Bonding with Universities

One justification offered for legacy admissions policies at universities is that that they bind entire families to the university. Proponents maintain that these policies have a number of benefits, including increased donations from members of these families. We use a rich set of data from an anonymous selective research institution to investigate which types of family members have the most important effect upon donative behavior. We find that the effects of attendance by members of the younger generation (children, children-in-law, nieces and nephews) are greater than the effects of attendance by older generations (parents, parents-in-law, aunts and uncles). Previous research has indicated that, in a variety of contexts, men and women differ in their altruistic behavior. However, we find that there are no statistically discernible differences between men and women in the way their donations depends on the alumni status of various types of relatives. Neither does the gender of the various types of relatives who attended the uni-versity seem to matter. Thus, for example, the impact of having a son attend the university is no different from the effect of a daughter.college legacy administion

The Impact of Athletic Performance on Alumni Giving: An Analysis of Micro Data

An ongoing controversy in the literature on the economics of higher education centers on whether the success of a school’s athletic program affects alumni donations. This paper uses a unique data set to investigate this issue. The data contain detailed information about donations made by alumni of a selective research university as well as a variety of their economic and de-mographic characteristics. One important question is how to characterize the success of an athlet-ic program. We focus not only on the performance of the most visible teams, football and bas-ketball, but also on the success of the team on which he or she played as an undergraduate. One of our key findings is that the impact of athletic success on donations differs for men and women. When a male graduate’s former team wins its conference championship, his dona-tions for general purposes increase by about 7 percent and his donations to the athletic program increase by about the same percentage. Football and basketball records generally have small and statistically insignificant effects; in some specifications, a winning basketball season reduces do-nations. For women there is no statistically discernible effect of a former team’s success on cur-rent giving; as is the case for men, the impacts of football and basketball, while statistically sig-nificant in some specifications, are not important in magnitude. Another novel result is that for males, varsity athletes whose teams were successful when they were undergraduates subsequent-ly make larger donations to the athletic program. For example, if a male alumnus’s team won its conference championship during his senior year, his subsequent giving to the athletic program is about 8 percent a year higher, ceteris paribus.

Insurance and the Utilization of Medical Services

Most data sets indicate a positive correlation between having health insurance and utilizing health care services. Yet the direction of causality is not at all clear. If we ob-serve a positive correlation between the utilization of health care services and insurance status, we do not know if this is because people who anticipate poor health buy more in-surance (or take jobs with generous medical coverage), or because insurance lowers the cost of health care, increasing the quantity demanded. While a few attempts have been made to implement an instrumental variables (IV) strategy to deal with endogeneity, the instruments chosen have not been entirely convinc-ing. In this paper we revisit the IV estimation of the reduced form relationships between insurance and health care utilization taking advantage of what we argue is a good instru-ment - the individual's self-employment status. Our main finding is that a positive and statistically significant effect of insurance continues to obtain even after instrumenting. Indeed, instrumental variables estimates of the impact of insurance on utilization of a variety of health care services are larger than their non-instrumented counterparts. The validity of this exercise depends on the extent to which self-employment status is a suitable instrument. To argue this case, we analyze panel data on transitions from wage-earning into self-employment and show that individuals who select into self-employment do not differ systematically from those who remain wage-earners with re-spect to either the utilization of health care or health status. While this finding does not prove that self-employment status is an appropriate instrument, it is encouraging that there appear to be no underlying differences that might lead to self-employment per se affecting health services utilization.

The ABCs of Charitable Solicitation

The “iron law of fundraising” says that people do not donate to a charity unless they are asked. We test the iron law using observational data on alumni giving at an anonymous research university, which we refer to as Anon U. At Anon U, volunteers use lists provided by the Devel-opment Office to telephone classmates and solicit them for donations. The names on these lists are always in alphabetical order. The volunteers who do the soliciting often run out of time be-fore they reach the end of their lists, and conditional on reaching the end of their lists, the solici-tations are likely to be done with less energy and enthusiasm. These observations suggest a sim-ple strategy for testing whether solicitation matters, viz., examine whether alumni with names toward the end of the alphabet are less likely to give than alumni with names toward the begin-ning, ceteris paribus. If so, then solicitation matters. Our main finding is that location in the alphabet--and hence, solicitation-- has a strong ef-fect on probability of making a gift, but not on the amount given, conditional on donating. This result is consistent with a theoretical model of charitable behavior developed by Andreoni and Payne [2003], in which solicitation reduces the transaction cost of making a gift. Our finding is also in line with a model in which individuals donate to charities in order to avoid the solicitor’s disapproval. In this case, the donation per se is perceived as eliminating the stigma; the amount given, conditional on giving, has no additional impact. We also find that women respond more strongly to solicitation than men. This is consistent with a robust result in the psychology litera-ture, that women find it more difficult than men to refuse requests that they perceive as being legitimate.

Do Real Estate Brokers Add Value When Listing Services Are Unbundled?

This paper measures the effects of real estate brokerage services provided to sellers, other than MLS listings, on the terms and timing of home sales. It is not obvious that sellers benefit from those services. On the one hand, brokers offer potentially useful knowledge and expertise. On the other hand, because the relationship between the homeowner and the broker resembles a classical principal-agent problem, the broker may not deploy services in ways that promote the seller’s interests. Yet as long as valuable MLS listings are bundled with brokerage services, homeowners may use brokers even if the agency costs exceed the benefits of brokers’ knowledge and expertise. Thus, quantification of the net value of brokerage services other than MLS listings bears directly on the recent policy debate over the desirability unbundling of MLS listings. We estimate the effect of a seller’s decision to use a broker on list prices, selling prices, and speed of sale for a real estate market with an unusual and critical characteristic: it has a single open-access listing service that is used by essentially all sellers, regardless of whether they employ brokers. Our central finding is that, when listings are not tied to brokerage services, a seller’s use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers’ knowledge and expertise by a wide margin.

Insurance, Health, and the Utilization of Medical Services

Most data sets indicate a positive correlation between having health insurance and good health, and between having health insurance and utilizing health care services. Yet the direction of causality is not at all clear. If we observe a positive correlation between the utilization of health care services and insurance status, we do not know if this is be-cause people who anticipate poor health buy more insurance (or take jobs with generous medical coverage), or because insurance lowers the cost of health care, increasing the quantity demanded. The direction of causation between health status and insurance is similarly unclear. While a few attempts have been made to implement an instrumental variables (IV) strategy to deal with endogeneity, the instruments chosen have not been entirely convinc-ing. In this paper we revisit the IV estimation of the reduced form relationships between insurance and both health care utilization and health status taking advantage of what we argue is a good instrument – the individual’s self-employment status. We find that IV estimates of the impact of insurance on the utilization of a variety of health care services are greater than estimates that ignore endogeneity. However, instrumental variables leads to a small and statistically insignificant estimate of the impact of insurance on health status. The validity of this exercise depends on the extent to which self-employment status is a suitable instrument. To make this case, we analyze panel data on transitions from wage-earning into self-employment and show that individuals who select into self-employment do not differ systematically from those who remain wage-earners with re-spect to either the utilization of health care or health status. That is, there appear to be no underlying differences that might lead to self-employment per se affecting health status or health services utilization.health, insurance, self-employment

Does Generosity Beget Generosity? Alumni Giving and Undergraduate Financial Aid

We investigate how undergraduates’ financial aid packages affect their subsequent dona-tive behavior as alumni. The empirical work is based upon a rich set of micro data on alumni giving at an anonymous research university, which we call Anon U. We focus on three types of financial aid, scholarships, loans, and campus jobs. A novel aspect of our modeling strategy is that, consistent with the view of some professional fundraisers, we allow the receipt of a given form of aid per se to affect alumni giving. At the same time, our model allows the amount of the support to affect giving behavior nonlinearly. Our main findings are: 1) Individuals who took out student loans are less likely to make a gift, other things being the same. Further, individuals who take out large loans make smaller con-tributions as alumni, conditional on making a gift. This effect is unlikely to be due to the fact that repaying the loan reduces the alumnus’s capacity to give. We conjecture that, rather, it is caused by an “annoyance effect” — alumni resent the fact that they are burdened with loans. 2) Scholar-ship aid reduces the size of a gift, conditional on making a gift, but has little effect on the proba-bility of making a donation. Students who received scholarships are also less likely to be in the top 10 percent of givers in their class in a given year. The negative effect of receiving a scholar-ship on the amount donated decreases in absolute value with the size of the scholarship. Again, we do not find any evidence of income effects, i.e., that scholarship recipients give less because they have relatively low incomes post graduation. 3) Aid in the form of campus jobs does not have a strong effect on donative behavior.alumni, donations, financial aid, college

Altruism and the Child-Cycle of Alumni Giving

This paper uses a unique data set to assess whether donors' contributions to a nonprofit institution are affected by the perception that the institution might confer a reciprocal benefit. We study alumni contributions to an anonymous research university. Inter alia, the data include information on the ages of the alumni's children, whether they applied for admission to the university, and if so, whether they were accepted. The premise of our analysis is simple: If alumni believe that donations will increase the likelihood of admission for their children 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 university, and the outcome of the admissions process. We refer to this pattern as the child-cycle of alumni giving. If the child-cycle is operative, one would observe that, ceteris paribus, the presence of children increases the propensity to give, that giving drops off after the admissions decision is made, and that the decline is greater when the child is rejected by the university. Further, under the joint hypothesis that alumni can reasonably predict the likelihood that their children will someday apply to the university and that reciprocity in the form of a higher probability of admission is expected, we expect that alumni with children in their early teens who eventually apply will give more than alumni whose teenagers do not. The evidence is strongly consistent with the child-cycle pattern. Thus, while altruism drives some giving, the hope for a reciprocal benefit plays a role as well. Using our results, we compute rough estimates of the proportion of giving due to selfish motives.

Are overhead costs a good guide for charitable giving?

Charity rating agencies often focus on overhead cost ratios in evaluating charities, and donors appear to be sensitive to these measures when deciding where to donate. Yet, there appears to be a tenuous connection between this widely-used metric and a charity’s effectiveness. There is evidence that a focus on overhead costs leads charities to underinvest in important functions, especially skilled workers. To evaluate policies that regulate overhead costs, it is necessary to examine whether donors care about overhead costs, whether they are good measures of charity effectiveness, and what effects a focus on overhead costs has on charities

Brother Can You Spare a Dime? Peer Effects in Charitable Solicitation

While the effects of peers on charitable giving have been of considerable interest to social scientists, there is little empirical evidence on the magnitude of these effects. A correlation between giving or volunteering by one’s peers and one’s own giving can be driven by self-selection into groups, common shocks that inspire both the solicitor to ask and the individual to give, or social influence. Using data from a university, this paper analyzes whether alumni are more likely to give and give larger amounts when they are solicited by someone with whom they have social ties. Freshman year roommate assignments and the structure of the university’s giving campaigns are used to overcome problems of selection and common shocks. Social ties play a strong causal role in the decision to donate and the average gift size. Additionally, a solicitor’s request is much more effective if he or she shares characteristics, such as race, with the alumnus being solicited.Charity, Social Influence, Social Ties, Common Shocks, Donations