Question of the Day: Should I Feel Guilty About Not Supporting Public Radio?

We recently ran a listener survey for Freakonomics Radio. Among the interesting findings: only (or should that be "only"?) 18 percent of the respondents are members of a public-radio station. A reader named Steve Cebalt wrote in to ask about the nature of public-radio membership:

So it's pledge week at my local public radio station, when they interrupt my favorite news programs with appeals for money. Funny, I used to be on the board of directors of this station, so I have a great appreciation for it.

But I am not a member. I don't pay. I am supposed to feel guilty, but I don't. You know why? 

Because I am not really causing a negative externality on others -- am I ?

Whether I listen or not, they'll still broadcast right? And others contribute freely of their own volition. So is anyone harmed if I listen (or don't listen) without donating?

I'd love to see your blog readers rip into this question from a Freakonomics perspective: 

So go ahead, people. Rip. Remember everything you've ever thought about free-ridership,  slippery slopes, and critical mass on issues like voting.

How Much Do Football Wins Pay Off for a College?

An NBER paper by Michael L. Anderson looks into the how a university's football performance affects its academic performance:

Spending on big-time college athletics is often justified on the grounds that athletic success attracts students and raises donations. Testing this claim has proven difficult because success is not randomly assigned. We exploit data on bookmaker spreads to estimate the probability of winning each game for college football teams. We then condition on these probabilities using a propensity score design to estimate the effects of winning on donations, applications, and enrollment. The resulting estimates represent causal effects under the assumption that, conditional on bookmaker spreads, winning is uncorrelated with potential outcomes. Two complications arise in our design. First, team wins evolve dynamically throughout the season. Second, winning a game early in the season reveals that a team is better than anticipated and thus increases expected season wins by more than one-for-one. We address these complications by combining an instrumental variables-type estimator with the propensity score design. We find that winning reduces acceptance rates and increases donations, applications, academic reputation, in-state enrollment, and incoming SAT scores.

Getting and Giving: How Does Receiving Financial Aid Affect Later Donations?

We ran a blog post a while back about how alumni should think about giving money to their alma maters. A recent NBER paper (abstract; PDF) by Jonathan Meer and Harvey S. Rosen looks at the "donative behaviour" of alumni who received financial aid. It has some really interesting conclusions:

The empirical work is based upon micro data on alumni giving at an anonymous research university.  We focus on three types of financial aid, scholarships, loans, and campus jobs. ...

Our main findings are:  1) Individuals who took out student loans are less likely to make a gift, other things being the same.  We conjecture that this phenomenon is caused by an "annoyance effect" --
alumni resent the fact that they are burdened with loans.  2) Scholarship aid reduces the size of a gift, but has little effect on the probability of donating.  The negative effect of receiving a scholarship on donations decreases in absolute value with the size of the scholarship.  We do not find any evidence that scholarship recipients give less because they have relatively low incomes post graduation.  3) Aid in the form of campus jobs does not have a strong effect on donative behavior.


Why Ranking Charities by Administrative Expenses is a Bad Idea

How does one know whether a charitable donation will make an impact? For this we need a simple formula (easy to write, hard to apply):

Idea X Implementation = Bang for your buck

When I give talks about aid effectiveness, people often comment that they too think this is important. And to make sure they are supporting good charities, they always hone in on the charities' finances to see how much goes to administrative and fundraising expenses. Charity Navigator, for example, scrubs these numbers and doles out stars to charities that don’t spend “too” much on operations.

Given the title of my book with Jacob Appel, More Than Good Intentions, many assume that they are speaking my language, and that I admire such focus on those numbers too.

But I do not. Those numbers do not tell you what is really happening.