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Honestly, why are you donating money to charity? An experimental study about self-awareness in status-seeking behavior

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Abstract

This study investigates experimentally whether people in retrospective are self-aware that they engage in status-seeking behavior. Subjects participated in a real-effort task where effort translated into a donation to a charity. Within-subjects we varied the visibility of their performance (private/public feedback). On average, subjects exerted more effort in the public treatment. After the real-effort task, subjects were asked to state their retrospective beliefs about their performance in public given feedback about their performance in private, and about the performance of other subjects in public given the average performance in private. Between-subjects, we varied the compensation that participants would receive for providing accurate performance estimates. Our results show a lack of self-awareness about status-seeking behavior that is robust to increased belief compensation. We also found that subjects expected others to be as status-seeking as they are themselves or even less.

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Notes

  1. There is ample empirical evidence from field and experimental studies that people engage in status-seeking behavior (see, for instance, Glazer and Konrad 1996; Ball and Eckel 1996, 1998; Ariely et al. 2009; Lacetera and Macis 2010). See Frank (1985a, b, 1999), Ireland (1994), Bagwell and Bernheim (1996), Hollander (2001), and Brekke and Howarth (2002) for theoretical studies of the relationship between consumption and status. See Weiss and Fershtman (1998) or Heffetz and Frank (2008) for overviews of the literature.

  2. Han et al. (2010) showed that wealthy consumers with low need for status prefer “quiet” goods recognized only by their own kind, while less wealthy that cannot afford these goods opt for the “louder” products. This could reflect people’s desire to signal good taste without signaling the desire to gain higher status.

  3. While this study’s focus is on how visibility changes donation behavior and how it relates to self-awareness issues, we do not address the question of why people engage in social status-seeking behavior. Note that social status concerns are not the only possible explanation for increased pro-social activities in a public setting. Such behavior is also predicted by social image models (see, for instance, Akerlof, 1980; Glazer and Konrad 1996; Bénabou and Tirole 2006; Ellingsen and Johannesson 2008; and Andreoni and Bernheim 2009). Such models consider as well the desirability and visibility, but they do not take positional concerns into account. An alternative, biology-based explanation for increased pro-social activity in a public environment is the competitive altruism hypothesis (Zahavi 1975). It proposes that the social status gains from pro-social activity may serve as a positive signal in the context of mate selection (in order to signal an individual’s quality, e.g., ability to share resources and/or good character, e.g., willingness to share resources, Smith and Bird 2000). Another potential candidate is indirect reciprocity (Nowak and Sigmund 1998) which is, however, limited to helping behavior as the return. Generally, the focus of our study is on the self-awareness with respect to the status-seeking behavior, while we treat the underlying motivation for status-seeking as a black box.

  4. Note that social status in this setting may come from the act of charitable giving as well as from the real-effort task itself (if a subject perceives the task as status-awarding). Since we are interested in status-seeking behavior, in general, it is not crucial for us to identify the precise driver of status-seeking behavior. In our experiment, we essentially regard the donations generated via the real-effort task as a proxy for an activity that conveys social status (if performance feedback is public).

  5. The modern theory of cognitive dissonance (Aronson 1992; Beauvois and Joule 1996) relates best to our study. It argues that dissonance primarily revolves around the self and a piece of behavior that violates that self-concept. See Harmon-Jones and Mills (1999) for a review of the current state of dissonance theory. The basic concept of cognitive dissonance is picked up in economics by models of self-image concerns, see Konow (2000), Johansson-Stenman and Martinsson (2006), Bénabou and Tirole (2011), and Matthey and Regner (2011). Other applications of cognitive dissonance to decision making in economics include Akerlof and Dickens (1982), Rabin (1994), and Oxoby (2003, 2004).

  6. Sartre (1958) formulated the paradox of self-deception: “The one to whom the lie is told and the one who lies are one and the same person, which means that I must know in my capacity as deceiver the truth which is hidden from me in my capacity as the one deceived.” Gur and Sackeim (1979) proposed the following criteria as necessary and sufficient for ascribing self-deception: (1) The individual simultaneously holds two contradictory beliefs. (2) The individual is only aware of holding one of the beliefs. (3) The act that determines which belief is subject to awareness is a motivated act. Recent studies in neuroscience provide a physiological basis for self-deception. Since most brain areas are only linked unidirectionally to others, the flow of information in the brain is constrained. This can result in reduced awareness of motivation for decisions (Brocas and Carrillo 2008). Notably, a lack of self-awareness about cognition is central to the understanding of self-deception. However, self-deception is stronger since in the context of status-seeking behavior it might be other attributes such as lack of introspection that also lead to unawareness of status-seeking behavior.

  7. For our purpose, the generation of donations via a real-effort task is preferable to a design that uses just one identifiable source of status-seeking behavior. When subjects can give directly to charity, the donation choices are highly transparent and estimating is rather pointless. When status should be conveyed merely by ability/performance in a real-effort task (without donations generated), heterogeneity in subjects’ status perception of the task is probably rather high and, in turn, it might be difficult to analyze status-seeking behavior. Our design features a straightforward pro-social signal and reduces the salience of the amount donated. It does not allow us to identify the actual motivation of status-seeking which is, however, not important for our study, see also footnote 4.

  8. In our experimental setup the task used is not a perfect instrument to vary subjects’ inclination to seek and gain status. When donations are generated via a real-effort task (our actual implementation) one can be rather sure that a performance difference between private and public context can be attributed to status-seeking. Running the experiment with the real-effort task alone (without donations to charity) does not eliminate status-seeking (see footnotes 4 and 8). A seemingly neutral task does not guarantee the elimination of status-seeking, either. Some subjects may still perceive the real-effort task on its own to be status-conveying which could drive them to exert more effort in a public setting. Given that this individual heterogeneity in the perception of whether a task is status-conveying or not cannot be elicited and controlled, any performance increase in a supposedly non-status task may nevertheless be due to status-seeking.

  9. No filler task was administered in the break. We simply wanted to provide subjects with an opportunity to relax from the possibly fatiguing screen activity. We decided to leave it up to them how to relax, instead of making them look at the screen again.

  10. Zizzo (2010) notes that a public ceremony meant to award social status can also produce social pressure. In our ceremony the top ranked was seen by everybody. Since subjects were told to sit down in their cubicle after their turn, the lower a subject was ranked the fewer other subjects could see him/her due to the sight limitations when sitting in a cubicle. We chose this procedure in order to reduce social pressure (from being one of the worst) effects.

  11. Based on a pre-test, students believe that Unicef is well perceived by the general public. Replies of actual subjects in our experiment confirmed this result.

  12. On the other hand, the subjects did on average increase their effort by only 1.18 tables in the public round which is not statistically different from the average belief in the low or high incentives treatment.

  13. We should, on the other hand, not conclude too much from the difference between model I and model II. Hence, we also estimated a model (with all observations) where individuals that increase their effort in the private round were distinguished from those that increase effort in the public round using a set of dummy variables and we found that the difference is not statistically significant.

  14. The intercept is negative and the dummies for the public–public and the private–private treatment are not significantly different from the intercept. This shows that in all treatments subjects expect that they contributed more in the first round.

  15. We ran all the regression without the gender control and nothing substantial changed besides the interaction Public first * belief1 in Table 8 became less significant with a p-value of 0.118. The value of the coefficient is still in the same level, which indicates that the model is noisier without controlling for the significant gender effect.

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Author information

Authors and Affiliations

  1. Max Planck Institute of Economics, Jena, Germany

    Mitesh Kataria & Tobias Regner

  2. Department of Economics, University of Gothenburg, Box 640, 40530, Gothenburg, Sweden

    Mitesh Kataria

Authors
  1. Mitesh Kataria
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  2. Tobias Regner
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Corresponding author

Correspondence to Tobias Regner.

Appendix

Appendix

1.1 Experimental instructions

Welcome and thank you very much for participating in this experiment. In this experiment you can earn money. Hence, it is important that you read the following instructions carefully.

Please note that these instructions are only meant for you and that you are not allowed to exchange any information with the other participants. Similarly, you are not allowed to talk to any other participant during the entire experiment. If you have any questions or concerns, please raise your hand. We will answer your questions individually. Please do not ask your question(s) aloud. It is very important that you follow these rules; otherwise we will have to stop the entire experiment. Please also turn off your mobile phone now.

1.2 General procedure

The experiment takes about 60 min and consists of two parts. You will now be given detailed information about your task in the first part of the experiment. The second part will be independent from the first part and you will be given the instructions for the second part only after the first part is finished.

During the experiment you can generate a donation for the charitable organization Unicef. In addition to that you will be paid a fixed amount for your participation. How much you donate to Unicef depends on your performance in this experiment. The final amount will be calculated in ECU (Experimental Currency Units) with 1 ECU = 0,1 EURO. At the end of today’s session, your earnings for Unicef will be converted into EURO and then be transferred to the organization’s account via online deposit. Furthermore, you will be paid your personal earnings in cash. This is comprised of a show-up fee of 2,5 EURO, a fixed payment of 4 EUROs for the first part of the experiment and an individual payment for the experiment’s second part, which depends on your (and possibly the other participants’) decisions.

After completing a short questionnaire the experiment will be finished and you receive your payoff.

Here is the procedure as an overview:

  • Read the instructions of the first part of the experiment

  • Test section T

  • Donation section S

  • Feedback

  • The instructions for the second part of the experiment will be distributed

  • Second part of the experiment

  • Questionnaire

  • Payoff and end of the experiment

1.3 Details of the experiment

During the experiment you can generate a donation to the charity organization Unicef.

1.3.1 How to donate?

You donate by correctly counting the number of zeros in a table. Every table processed correctly guarantees you 1 ECU. The more tables you process correctly, the higher is your donation. The following screenshot is the same you will be presented with during the experiment.

figure a

Please enter the number of zeros you count in the table on the left- hand side in the box on the right-hand side of the screen. After you have done so, please press ‘OK.’ If you have counted the number of zeros correctly, the computer will automatically generate a new table for you to count. If your count was not correct, you have two more tries to enter a correct number. If you have entered an incorrect number of zeros three times for the same table, you will be deducted 1 ECU and the computer generates a new table for you to count.

1.3.2 Example

You enter the correct amount of zeros for three tables, count incorrectly once for a fourth table and enter an incorrect number three times for another table. Your donation will then look as follows:

  • 3 ECU for three correct tables.

  • \(-1\) ECU for the one table, where you have entered an incorrect number three times.

Hence, your final donation would be 2 ECU.

1.3.3 Procedure

Before the actual experiment starts, you will play a test section T so you can familiarize yourself with the counting process. You will have 4 min to practice. You will not be generating any donations in this section.

Afterward, we will start with section S, where you will actually be generating donations. At the end of the experiment you will be given feedback regarding your donation, i.e., you ...

  • will be shown on screen how many tables you processed correctly,

  • will be shown on screen your rank in comparison to the other participants.

ONLY TREATMENT PUBLIC:

[In addition to that, the other participants will be informed about your personal performance. For this, all participants will be called one by one. You stand, you say the amount of points you reached and your rank, and then you sit down. The order will be determined by the rank. The one who has generated most donations will be called first, and the one who generated fewest donations will be called last.]

1.4 Your earnings from this experiment

Your earnings from this experiment will be comprised by your show-up fee (2,5€) and the fixed amount. You will be paid your total earnings in cash directly after everybody completed the second part of the experiment, i.e., after having completed the final questionnaire.

Furthermore, you will be donating an amount to Unicef according to your performance in this experiment. The ECU you generated for your donation will be converted into EURO. After the experiment, the total amount of all donations will be transferred to the organization via their web site. This process will be supervised by two participants of the experiment.

1.5 Additional regressions to Table 6

 Model: (1)private--public (reference) and private--private

Independent variables

Dependent variable: expected increase in effort in round 2

SE

Dummy variables

  

   Private (=1 if assigned to the private-private treatment)

\(-1.72\)

1.23

   High incentives (=1 if assigned to the high incentives treatment)

0.132

1.1

   Women (=1 if woman)

0.456

0.931

   Constant

\(-1.99^{***}\)

1.12

Continuous variable

  

   Effort Period 2–Effort Period 1

0.273\(^{*}\)

0.139

Interaction

  

   (Effort Period 2–Effort Period 1) * Private

0.331\(^{*}\)

0.176

No. of obs.

89

 

\(R2\)

0.266

 
  1. \(^{*, **}\), and \(^{***}\) denote that the coefficient is statistically significant at the 10, 5, and 1 % level, respectively, using a two-sided t test

 Model: (2) public--private, and public--public treatments

Independent variables

Dependent variable: expected increase in effort in round 2

SE

Dummy variables

  

   Public (=1 if assigned to the public–public treatment)

\(-3.768\)

1.459

   High incentives (=1 if assigned to the high incentives treatment)

1.33

1.16

   Women (=1 if woman)

1.29

0.96

   Constant

1.27

0.99

Continuous variable

  

   Effort Period 2–Effort Period 1

0.267\(^{*}\)

0.14

Interactions

  

   (Effort Period 2–Effort Period 1) * Public

\(-0.205\)

0.312

No. of obs.

94

 

\(R2\)

0.172

 
  1. \(^{*, **}\), and \(^{***}\) denote that the coefficient is statistically significant at the 10, 5, and 1 % level, respectively, using a two-sided t test

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Kataria, M., Regner, T. Honestly, why are you donating money to charity? An experimental study about self-awareness in status-seeking behavior. Theory Decis 79, 493–515 (2015). https://doi.org/10.1007/s11238-014-9469-5

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