Journal
JOURNAL OF PUBLIC ECONOMICS
Volume 157, Issue -, Pages 15-26Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jpubeco.2017.11.005
Keywords
Avoiding-the-ask; Charitable giving; Field experiment; Inattention; Nudge; Reminders
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Funding
- Kobmand Ferdinand Sallings Mindefond
- Aarhus University
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We document the hidden costs of a popular nudge and show how these costs distort policy making when neglected. In a field experiment with a charity, we find reminders increasing intended behavior (donations), but also increasing avoidance behavior (unsubscriptions from the mailing list). We develop a dynamic model of donation and unsubscription behavior with limited attention. We test the model in a second field experiment which also provides evidence that the hidden costs are anticipated. The model is estimated structurally to perform a welfare analysis. Not accounting for hidden costs overstates the welfare effects for donors by factor ten and hides potential negative welfare effects of the charity.
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