Stefano Della Vigna, a Scholar Beyond Rationality

Why do we give money to charities? Are we just plain generous or susceptible to social pressure? To answer this question Stefano Della Vigna, Professor of Economics at the University of California, Berkeley, did an experiment with John List and Ulrike Malmendier that is reported on the paper "Testing for Altruism and Social Pressure in Charitable Giving". They arranged two door-to-door fundraisings in the Chicago suburbs to collect money for two well regarded non-profit organizations. One was publicized in advance by a flyer, the other one came totally unexpected. "When the fundraising is announced, less people is found home and donations diminish. It's the lower contributions, those under 5 dollars, that significantly drop, maybe because low-denomination banknotes are given away to get rid of the people at the door".

It's called Behavioral Economics and it's Della Vigna's research field of choice since his degree at the Bocconi University. During the Epistemology course he bumped into the writings of Nobel laureates Herbert Simon and Daniel Kahneman, and of Amos Tversky, among the founders of Behavioral Economics. According to this theory, classic economic models are simplistic and based on the wrong assumption that the consumer always makes rational choices. "There was a time when any behavioral approach was harshly criticized. In the last five, maybe ten years the Behavioral Economics research has gone mainstream. Now, it helps us to understand the reason why people use financial tools that they don't comprehend or to describe saving behaviors. We become better scientists when we take into account human errors and misery".