The surcharge donation paradox and the restorative power of choice

Abstract Surcharges discourage undesirable behaviors but often trigger backlash regarding profit motives. Donating the proceeds to charity resolves this conflict but may potentially undermine the “pain of paying” required for deterrence. Across an incentive-compatible lab study and a large-scale field experiment, we find surcharges donated to a designated charity increased inattentive survey responses (Study 2) or peak-hour travel (Study 3, a randomized controlled trial). However, we identify a moderator: the choice of charity beneficiary. Allowing surcharge payers to select the beneficiary restored the surcharge’s effectiveness, recovering approximately 85% of the standard (non-donated) surcharge’s effectiveness in the RCT. We posit that choice enhances policy endorsement, counteracting the reduced pain of paying. For policymakers, the implications are clear: donating a surcharge reduces its effectiveness as a behavioral deterrent, but letting surcharge payers choose a beneficiary can sustain the effectiveness of the surcharge.