The False Altruism of Alumni Giving

Can a charitable act truly be called charitable when the contributor wants or expects a reward?

In a new study, Princeton economics professor Harvey Rosen and Stanford graduate student Jonathan Meer examined this question using a specific case of incentivized charity: alumni donations. They found that the size and frequency of an alumnus’s contributions to his alma mater rise in direct correlation with his child’s age and likelihood of applying to the school. The data consisted of more than 32,488 donations given between 1983 and 2006 to an unnamed university, as well as information on the age and admissions status of each donor’s children.

The numbers indicate that, after his child is born, an alumnus’s chances of making a donation rises 13%, and continues to increase as the child ages, reaching 17% when the child turns thirteen. For those with children ages 14-17, the probability of giving increases if the teen ultimately applies. After age 17, giving by alumni whose children were admitted goes up a whopping 34%, while those whose kids don’t make the cut cease giving almost entirely. Whether the giving actually affects a child’s admissions chances remains unstudied; for Rosen and Meer’s purposes, “the child-cycle of alumni giving requires only the perception of reciprocity.”

The choice of school (and its admissions exclusivity) may have had a heavy influence on the data. As noted in a Slate article by the economist Joel Waldfogel (whose “Deadweight Loss of Christmas” paper Levitt and Dubner discussed in a New York Times Magazine article), the university “looks like a pretty elite place,” in that “[m]ore than 40 percent of the students attended private schools before college, and 40 percent attain an advanced degree afterward.” As further indication that the school is among the more prestigious: the “fields of education, finance, health care, and law are highly represented” in alumni careers. More than half of alumni (56 percent) donate in any given year. Their average gift is $466, with distribution heavily skewed by large gifts.”

While the results provide some insight into the reasoning behind charity, it’s hard to believe that the donating patterns of likely upper-middle class parents (particularly those facing a recent and much-hyped college admissions crunch) can really “shed light on the general issue of altruism,” as the authors claim. Though the findings do put a new spin on Steve Landsburg‘s theories on charitable giving.