Robert J. Shiller, Sterling Professor of Economics at Yale, reports that donors give more when they have a sense of belonging, noting the following:

With the rise of behavioral economics, my profession is no longer so fixated on the theory that people are relentlessly selfish, striving only to maximize their own pleasure. We know, for example, that work is not just eight daily hours of suffering that people endure to make money for their own benefit. People actually like to work if they see meaning in it, and they can be generous with their money, too.

I work at the nonprofit Yale University, and the higher purpose of education is a major reward for me. Many teachers and others in the helping professions share that feeling. They have consciously chosen to make less money than they could in the private sector, because they feel they are contributing to a greater good.

Philanthropic causes could do more to gain from this natural tendency. Yes, charities have already been very inventive in strategies to encourage donations, but they’ve been limited by institutional and legal structures that they take as a given. Fortunately, charities now have a chance to look at some new organizational paths to giving, some of which have benefited from research in behavioral economics.

via Donors Give More When They Have a Sense of Belonging – NYTimes.com.

Editor’s Note:  For one of the best books on behavioral economics, see Thinking Fast & Slow, by Daniel Kahneman.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.