Share with your friends










Submit

Analytics Magazine

Study: Sharing social responsibility produces surprising results

Firms sharing social responsibility for the social good with customers is generally seen as a win-win – more patronage from socially responsible customers and larger benefits to society. A forthcoming study in the INFORMS journal of Marketing Science, a leading academic marketing journal, however, questions the premise. The study finds that when a firm shares social responsibility with customers by asking them to “pay what you want,” promising a certain percentage of revenues to be donated to charity, consumers respond to whether firms give, but very little to how much they give. A firm only needs to donate very little for customers to open their wallet – a win for firms, but not for charities and society.

The study, “Signaling Virtue: Charitable Behavior under Consumer Elective Pricing,” authored by Minah Jung (NYU), Leif Nelson (University of California at Berkeley) and Uri and Ayelet Gneezy (University of California at San Diego), examines consumer behavior under the broad umbrella of “shared social responsibility” – where firms and consumers take joint responsibility for the social good. They operationalize shared social responsibility creatively as a variant of “pay what you want pricing,” at a major supermarket retailer in which more than 2,7000 customers were offered the option of how much they would pay for the retailer’s reusable shopping bag, when a certain portion of their payment goes to a charity.

The surprising finding that customers are very sensitive to whether a portion of their payment goes to charity, but seemingly insensitive to how much goes to charity, has critical implications for the design of shared social responsibility programs. In the field experiment, customers paid more than twice as much for a reusable shopping bag when told that 1 percent of their payment would go to charity relative to when nothing would be offered to charity. But they did not pay much more when donations increased to 50 percent, 99 percent or even 100 percent. A little charity goes a long way; a lot more does not go any further.

Digging deeper into this surprising behavior, the researchers found that consumers felt the same level of “warm glow” – the emotional happiness from having done a good deed – irrespective of how much of their money went to a charity. “Consumers feel about the same whether 1 percent or 99 percent of their payment went to charity,” said lead researcher Minah Jung.

Scope sensitivity sounds anodyne, but it is by no means innocuous. Notes Ayelet Gneezy, “It gives firms perverse incentives in how they frame their corporate social responsibility programs. Offering a minimal contribution can increase profit dramatically. But as the charitable contribution increases consumers don’t give more, so profits go down. The most profitable strategy for the firm is to give to charity, but the smallest possible amount.”

Nelson cautions, “Sharing social responsibility with one’s customers sounds like a sure multiplier for the social good. Not so fast. When all customers care is for the warm glow of giving, sharing responsibility with them may not be the promised manna for the social good.”

Related Posts

  • 50
    Online user reviews have become an essential tool for consumers who increasingly rely on them to evaluate products and services before purchase. The business models of online review platforms such as Yelp and TripAdvisor and e-commerce sites such as Amazon and Expedia critically depend on them. Should such sites pay…
    Tags: social, science, marketing
  • 40
    Holiday Retirement won the 2017 Franz Edelman Award for Achievement in Operations Research and the Management Sciences from INFORMS for its use of operations research (O.R.) to improve the pricing model for its more than 300 senior living communities across the United States.
    Tags: social, charity, responsibility, customers, consumers, percent, firms, good, sharing
  • 34
    The 39th Annual ISMS Marketing Science Conference will be held June 7-10 at the University of Southern California in Los Angeles. The ISMS Marketing Science Conference is an annual event that brings together leading marketing scholars, practitioners and policymakers with a shared interest in rigorous scientific research on marketing problems.…
    Tags: marketing, science
  • 30
    FEATURES ABM and predictive lead scoring Account-based marketing, and the related technology of predictive lead scoring, is dramatically changing the face of sales and marketing. By Megan Lueders Software survey: joys, perils of statistics Trends, developments and what the past year of sports and politics taught us about variability and…
    Tags: marketing, science, good
  • 30
    The 39th Annual ISMS Marketing Science Conference will be held June 7-10 at the University of Southern California in Los Angeles.
    Tags: marketing, science

Analytics Blog

Electoral College put to the math test


With the campaign two months behind us and the inauguration of Donald Trump two days away, isn’t it time to put the 2016 U.S. presidential election to bed and focus on issues that have yet to be decided? Of course not.


Headlines

What you like in a CEO candidate may not deliver results

Attributes that often get someone hired as CEO may not be the ones that drive success once they are at the helm of the company. That’s one of many provocative insights in a study by consulting firm ghSMART. The study, recently featured in Harvard Business Review, identifies characteristics that differentiate the most effective leaders. Read more →

Paying for online reviews backfires among socially influential

Online user reviews have become an essential tool for consumers who increasingly rely on them to evaluate products and services before purchase. The business models of online review platforms such as Yelp and TripAdvisor and e-commerce sites such as Amazon and Expedia critically depend on them. Should such sites pay users to encourage them to write reviews? Read more →

UPCOMING ANALYTICS EVENTS

INFORMS-SPONSORED EVENTS

CONFERENCES

2017 INFORMS Healthcare Conference
July 26-28, 2017, Rotterdam, the Netherlands

CAP® EXAM SCHEDULE

CAP® Exam computer-based testing sites are available in 700 locations worldwide. Take the exam close to home and on your schedule:


 
For more information, go to 
https://www.certifiedanalytics.org.