Peer effects in donations: Evidence from random assignment of college roommates

Abstract

Understanding the determinants of philanthropic behaviors, which bring benefits to society but come with private costs, is crucial. In this study, we investigate the causal impact of exposure to peers with prosocial behaviors on an individual's donations. In contrast to previous research, we address the issue of self-selection by exploiting the random assignment of college roommates and tackle the challenges of reflection bias by examining peers’ volunteering history in high school in relation to an individual's donations in college. Our results indicate a statistically significant and positive impact of peers’ prosocial behaviors on an individual's own donations. Moreover, we find that the magnitude of peer effects varies based on individuals’ donation levels, interaction preferences, and self-confidence levels, suggesting social pressure as a potential mechanism of peer influence. This study contributes to the existing literature by shedding light on the role of social influence in shaping philanthropic behaviors.