This paper studies incentivized voluntary contributions to a charitable activity. Motivated by the market for blood donations in Germany, we study a setting where different incentives coexist and agents can choose to donate without receiving monetary compensation. This lets agents reveal and signal their individual preferences through their actions. In a model that interacts image concerns of agents with intrinsic and extrinsic incentives to donate, we show that this setting can bring about efficiency gains in the collection similar to those deriving from self-selection in second-degree price discrimination. We develop a laboratory experiment to test our theoretical predictions under controlled conditions. Results show that a collection system where compensation can be turned down can improve the efficiency of collection. Introducing the choice to be compensated does not crowd out unpaid donations. A significant share of donors chooses to donate without being compensated. Heterogeneity in treatment effects suggests gender-specific preferences over signaling.
We use a field experiment to study how social image concerns affect pledges to engage in a charitable activity. We work with two different blood banks and a municipal government in Germany to offer sign-ups for human whole blood donations. Motivated by a simple signaling framework, we randomly vary the type of organization to donate to and the visibility of the pledge. Our setting also provides natural variation in the group of people that form the "audience" for social image concerns. We find evidence for strong social image concerns when subjects are asked in public whether they would like to pledge a donation with a well-known charity. Pledges of our subjects do not to induce any charitable giving. Almost all subjects renege on their pledge, with no detectable differences between treatments.
| World Bank Group (2015)
In 2013, the World Bank Group adopted two new goals to guide its work: ending extreme poverty and boosting shared prosperity. More specifically, the goals are to reduce extreme poverty in the world to less than 3 percent by 2030, and to foster income growth of the bottom 40 percent of the population in each country. While poverty reduction has been a mainstay of the World Bank’s mission for decades, the Bank has now set a specific goal and timetable, and for the first time, the Bank has explicitly included a goal linked to ensuring that growth is shared by all. The discussion until now has centered primarily on articulating the new goals. This report, the latest in World Bank’s Policy Research Report series, goes beyond that and lays out their conceptual underpinnings, discusses their relative strengths and weaknesses by contrasting them with alternative indicators, and proposes empirical approaches and requirements to track progress towards the goals. The report makes clear that the challenges posed by the World Bank Group’s new stance extend not just to the pursuit of these goals but, indeed, to their very definition and empirical content. The report also argues that an improved data infrastructure, consisting of many elements including the collection of more and better survey data, is critical to ensure that progress towards these goals can be measured, and policies to help achieve them can be identified and prioritized.
| Global Policy 6(4): 343–357 (2015).
We argue that survey-based median household consumption expenditure (or income) per capita be incorporated into standard development indicators, as a simple, robust and durable indicator of typical individual material wellbeing in a country. Using household survey data available for low and middle-income countries from the World Bank's PovcalNet tool, we show that as a measure of income-related wellbeing, it is far superior to the commonly used GDP per capita as well as survey-based measures at the mean. We also argue that survey-based median measures are ‘distribution-aware’, i.e. when used as the denominator of various widely available indicators such as mean consumption expenditure per capita they provide a ‘good enough’ indicator of consumption (or income) inequality. Finally, as a post-2015 indicator of progress at the country-level in promoting shared development and reducing inequality, we propose that the rate of increase in median consumption per capita after taxes and transfers exceeds the rate of increase in average consumption in the same period.
| The Oxford Handbook of Africa and Economics: Volume 1: Context and Concepts. (2015).
This chapter considers economic development of sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have “productivity enclaves,” islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? Three sets of factors are summarized and analyzed: first, the poor business climate, which constraints the allocation of production factors between sectors and firms. Second, the complex political economy of business–government relations in Africa’s small economies. Third, the distribution of firm capabilities. The roots for these factors lie in Africa’s geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.
| World Development 60: 132–146 (2014).
We identify a group of people in Latin America that are not poor but not middle class either—namely “strugglers” in households with daily income per capita between USD 4 and USD 10 (at constant 2005 PPP). This group will account for about a third of the region’s population over the next decades; as the size and income of the middle class rises, they could become increasingly marginalized. The cash transfers they receive are largely offset by indirect taxes; the benefit of schooling and other in-kind transfers they receive is questionable after adjusting for quality. We discuss implications for the social contract.