Transaction costs, the opportunity cost of time and procrastination in charitable giving

a r t i c l e i n f o We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once, keep postponing. We conjecture that transaction costs will have a greater effect on donations if the solicitation is received when the opportunity cost of time is high. We find evidence of a transaction cost reducing donations, with the size of this effect depending on the opportunity cost of time, but no statistically significant evidence that giving people more time to donate increases procrastination and thus reduces donations. " Many things never get done not because someone has chosen not to do them, but because the person has chosen not to do them now. " 1. Introduction Do some people intend to give money to charity, but simply never get around to doing so? For example, someone may read an email asking for a donation and is inclined to donate, but as she is busy preparing for a meeting decides to wait until after the meeting to donate via the charity's website. It is then possible that having delayed making the donation once, she will do so again, and procrastinates until the opportunity to donate has passed, or she has forgotten about it (e. The inefficiency associated with people not getting around to completing a task that is beneficial to them has been documented in a number of contexts (e.g., joining a retirement savings scheme, claiming rebates, redeeming vouchers), which all involve a transaction cost. Giving to charity, especially in response to solicitations received by mail or email, also typically involves a transaction cost; examples include writing out a check and posting it or visiting the charity's website and entering credit card details. We argue that the presence of even a small transaction cost might have implications for the likelihood of procrastination , depending on the opportunity cost of time when the opportunity to take an action first arises. In the case of charitable giving this means analyzing if people are more likely to donate if they are not busy when they first receive the solicitation. This has important policy implications as finding ways to reduce transaction costs, and minimizing the potential …