An experimental comparison of rebate and matching in charitable giving: The case of Japan

Abstract

This study uses a Japanese nationwide sample and experimentally compares rebate and matching, both of which are schemes intended to lower the price of monetary donation. Standard economic theory predicts that the two schemes will have the same effect on individuals’ donation behavior when their donation price is equivalent. However, we conduct an incentivized economic experiment through the Internet on 2300 Japanese residents, and find that matching, which lowers the donation price by adding a contribution from a third-party, increases individuals’ donation expenditures compared to rebate, which lowers it through a refund from a third-party. The experimental result shows that the donation expenditure in a 50% rebate treatment drops by approximately 126 Japanese yen compared to the control, while in a 1:1 matching treatment with essentially the same price of donation as the 50% rebate, the expenditure conversely rises by approximately 56 Japanese yen. This tendency is consistent with the results of previous experimental studies comparing the two schemes. We further empirically confirm that the superiority of 1:1 matching over 50% rebate is not conclusively influenced by the participants’ confusion or misunderstanding, or budget constraint lines’ difference between the two schemes. Although the Japanese government has previously enriched rebate’s content, the level of monetary donations by the Japanese people is still low on an international scale. Based on this study’s findings, we discuss the possibility that implementing matching into the society effectively encourages their donation behavior.

Perception of generosity under matching and rebate subsidies

“…The preference for matches may arise because of differences in the cooperation versus reward frame, or for other reasons. Sasaki et al (2022) explicitly argued that the cooperation versus rewards frame partly explains higher donations under matches, but they only showed that this difference cannot be entirely explained by confusion or truncation. No positive evidence was offered that framing, per se, is responsible for differences across treatments.…”

“…That is, for a given amount of money a subject is endowed with in the lab, the maximum possible net donation is higher for a match than a rebate. Lukas et al (2011) and Sasaki et al (2022) adopted different methodologies to control for truncation effects, and both continued to find higher donations under a match than a rebate. These experiments rule out truncation as the sole driver of differential behaviour under matches and rebates, but like many of the aforementioned studies, they are unable to offer positive explanations for the residual differences.…”