CoolData blog

4 February 2010

The habit of giving, and the habit of testing

Filed under: Predictor variables — Tags: , , , — kevinmacdonell @ 9:33 am

I think it’s always interesting to know what patterns others have found that are predictive of giving. But it’s a mistake to latch onto them as if they were universal truths.

A story in the January 2010 issue of CASE Currents magazine (the publication of the Council for Advancement and Support of Education) alerted me to a new study which the story says “shows that alumni who gave to their alma mater every year in the first five years after graduation gave, on average, eight times more to the institution by their 20th year out than even those alumni who donated the same amount in the first few years but did not make a steady habit of it.”

The Habit of Giving (PDF) is the work of Jonathan Meer, an assistant professor of economics at Texas A&M University, and Harvey S. Rosen, a professor of economics and business policy at New Jersey’s Princeton University.

Meer’s research focuses on habit formation. In this case, he’s trying to parse out the influence of habit from other influences, such as solicitation by one’s former roommates or performance of the school’s athletic teams. Many fundraisers believe in the effect of habit – that small gifts early on will lead to big gifts later in life – but Meer sets out to determine the truth.

This is very interesting, of course. But too often these findings are stated in language that assumes that patterns, once found, must apply everywhere. Meer’s findings are based on data from a single private research university. He writes, “It seems evident that the pursuit of frequent gifts from young alumni, even if the university suffers a loss in the process, is justified.”

Really? Justified for the single institution in his study, yes. But for my institution? Or yours?

I don’t doubt there are patterns relating to charitable giving that are woven through the entire fabric of humanity. But when it comes down to return on investment for a single enterprise, wouldn’t it make sense to test the assumption first?

(In any case, I encourage you to read Meer’s paper; I’ve given it rather short shrift here.)

A thought about ‘habit‘ … Meer observes that many of us in fundraising put faith in instilling the good habit of giving. I’m not one of them. I don’t actually believe in ‘good’ habits. Habitual behaviour is mindless, and habits drift in and out of our lives mindlessly. Paradoxically perhaps, habit is inconstant and unreliable.

Isn’t charitable giving something that people should intend to do? And shouldn’t we earn it? Nothing should let us off the hook from making our case to donors.

The more that giving is based on intent, the more unpredictable it will be. Our models will never ‘explain’ all or even the majority of the variability of giving. I rather like living in a world where predictable, knee-jerk herd behaviour is trumped by unpredictable (but meaningful) personal choice. Even if it makes my job harder!

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4 Comments »

  1. Hi Kevin, Thanks for the mention. One of the takeaways in talking to Jonathan Meer for me was just how rich he found the data set of Anon U, coming at it from the perspective of an academic and an economist.
    Your point about it being true for one school is well taken.
    Would you expect to find something different for your institution? How difficult do you think it would be to replicate Meer’s test? If five or ten institutions wanted to do so, I would be very interested in the findings and I think it would warrant a follow up story in CURRENTS.

    Comment by Diane Webber-Thrush — 4 February 2010 @ 11:44 am

    • Would I expect something different at our institution? Probably not, in fact. The magnitude of the effect Meer discovered would probably differ for us, but despite what I say about making assumptions, I would be surprised if I didn’t find something like this in our data. (What I caution against is an institution investing heavily in any solicitation strategy without first making the case using the institution’s own data.) I think a multi-university study would be fascinating and I’d love to have us participate. And, I can suggest at least one other university that has for years made use of exactly this observed effect in their data to identify new prospects, with great success. Replication of this aspect of Meer’s study would be limited by the depth of one’s data, i.e. how many years of giving data one has
      in the database. That aside, I think it can be done, and would be worth doing.

      Comment by kevinmacdonell — 4 February 2010 @ 9:10 pm

  2. I don’t intend to take you out of context, but this sentence applies to a chapter in a book I’m currently reading.

    “Habitual behaviour is mindless, and habits drift in and out of our lives mindlessly. Paradoxically perhaps, habit is inconstant and unreliable.”

    Chapter 10 of Dan Ariely’s book “The Upside of Irrationality” (published 2010) is “The Long-Term Effects of Short-Term Emotions”. In the chapter he writes about self-herding, which he categorizes into specific self-herding and general self-herding. The chapter is more about how emotions influence our decisions, even long after the emotions of the original incident have left us.

    So, although habitual behavior is mindless, it does affect our behavior in the long term. So, those donors that are habitually donating annually may indeed self-herd themselves into donating more over time.

    I get the point of your post, which is what works for one institution may not work for another. I’m just not sure I agree with your premise that habit is inconstant and unreliable.

    Comment by Brian Zive — 14 July 2010 @ 1:12 pm

    • I would draw a distinction between emotionally-driven (or intuition-driven, or “irrational”) actions and “habitual” actions. I think emotionally-prompted action is fine, and in fact we make our strongest case in fundraising when we appeal to emotion. I have a problem with the word “habit”. For me habit is the opposite of intentional. And, to your point, habit is also the opposite of emotionally-driven action (even when, as you paraphrase Ariely as saying, the original emotion associated with the action is no longer present). I may be loading the word, but I think habit is the blind, unaware, autopilot side of the human organism, and I don’t like the use of the term in philanthropy. However, I’m now even more out of my depth than usual, so I’ll stop there!

      Comment by kevinmacdonell — 16 July 2010 @ 7:31 am


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