Institutional Affiliation: Georgia State University
|Robbing Peter to Pay Paul: Understanding How State Tax Credits Impact Charitable Giving|
with Chandrayee Chatterjee, Michael K. Price, Florian Rundhammer: w27163
Donations to charity are widely encouraged by policymakers through targeted tax incentives such as tax credits for contributions only to qualifying causes. We use a framed field experiment to test how the largest such program, Arizona’s state income tax credit for donations to qualifying charities, affects donation decisions in a modified dictator game. In the experiment, we randomize whether subjects receive detailed information about the tax credit program prior to selecting potential recipients and completing the allocation task. We also vary the number of charities that subjects can select as recipients along with the (tax-credit) qualifying vs. non-qualifying composition of the choice set. We find that average giving is unaffected by the information provision and composition of the ch...
|Designed to Fail: Effects of the Default Option and Information Complexity on Student Loan Repayment|
with Daniel Kreisman, Susan Dynarski: w25258
We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government’s Student Loan Exit Counseling website. We test the role information complexity, uncertainty about earnings, and the default option play. We show that despite an ex ante optimal choice, the majority choose, or are defaulted into, a plan that offers no protection against default. We find the default option is a driver of this phenomenon, suggesting the government has an easy policy lever to lower default rates – change the default plan.
|Moral Costs and Rational Choice: Theory and Experimental Evidence|
with John A. List, Michael Price, Vjollca Sadiraj, Anya Samek: w22234
The literature exploring other regarding behavior sheds important light on interesting social phenomena, yet less attention has been given to how the received results speak to foundational assumptions within economics. Our study synthesizes the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of economics—the contraction axiom—within a sharing framework. Making use of more than 325 dictators participating in a series of allocation games, we show that sharing choices violate the contraction axiom. We advance a new theory that augments standard models with moral reference points to explain our experimental data. Our theor...