Modeling Scale Attraction Effects: An Application to Charitable Donations and Optimal Laddering

The charity industry is substantial ($300B annually), expanding rapidly, and presently accounts for over 2% of US GDP. Intriguingly, individual, non-corporate giving comprises the lion’s share of this total, nearly three-quarters in 2012. To obtain these individual-level donations, charities nearly universally present an “appeals scale” when contacting potential donors. In the charity sector, the appeals scale refers to a list of “scale points” (specific suggested amounts) and an “other” category, allowing the respondent to donate any amount not on the scale. Orthodox economic theory might therefore suggest that the points used on the scale “should be” irrelevant, since one can ignore them without penalty or effort. But it remains an empirical question whether, behaviorally, respondents are indeed influenced by these sorts of commonly-used scales and, if so, in what ways. Choosing scale points well is an important decision for charities: overly high scale points can be ignored as being “outside my comfort zone”, or even potentially alienate donors who feel they are being pressed for much more than they’re prepared to give. Worse for the charity, overly low scale points may actually pull donations downward. Despite their widespread use, such scales seem to be designed in a one-off manner by individual charities, and to date there have been no formal models in marketing to help guide them, based on data they already possess. To that end, we develop a comprehensive model of scale attraction effects that describes in detail how each scale point ‘pulls’ a donor away from the latent, intended donation amount; and moreover, how the pulls of each of the points on the scale accumulate to influence the final, observed donation.