Dear Economist: How can we lure election donors?

I am assisting a friend who is contesting an Indian election as an independent candidate. We would like to raise campaign funds by getting common people to chip in. One of the problems I foresee is people arriving at a contribution website or collection booth and then not knowing how much to contribute. We could suggest predefined contribution amounts, but we wouldn’t like to see large contributions lost because our suggestions are too small. Neither do we want to turn away micro-contributions from large numbers of people. How should we proceed?
Regards, Gaurav Roy

Dear Gaurav,

Rachel Croson, an economist, and Jen Shang, a psychologist, have been asking themselves a similar question. Croson and Shang teamed up with fundraisers at two American public radio stations to stage a couple of experiments. In each experiment, when listeners called in to donate, the fundraiser casually mentioned a previous donation.

In the first experiment, the donation was either said to be $75, a typical donation, or $300. Callers who were told about the $300 donation tended to give more – more than 10 per cent more, on average. In the second experiment, the donation was said to be either $600 or $1,000. Here, the $1,000 hint raised less money than the $600, perhaps because the amounts were too large to seem relevant.

I have three suggestions. First, make your suggested contributions optimistic but realistic. Second, offer a spread of options to catch different types of donor. Third, experiment if you can – perhaps you can program your website to make different suggestions and see which combination works best. An election is not a radio station, and India is not the US, so this is an area where a little extra research may tell you a great deal.

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Tim, also known as the Undercover Economist, writes about the economics of everyday life.