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fortyeridania comments on Applied Optimal Philanthropy: How to Donate $100 to SIAI for Free - Less Wrong
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That's true. But the next part, that it "can be donated," does not follow. (I am assuming here that by "can be donated" you mean "can be donated without militating against the budget's priorities.")
Consider the following three cases. Case 1: Sheila is struggling to make ends meet. She spends next to nothing on fuzzies or on externality-laden projects (e.g. SIAI). Case 2: Carrie is well-off, and spends a lot of fuzzies and others' utilons. Case 3: Malcolm is in the middle. Sudden income decreases might put him into Sheila's subsistence mode, and sudden increases might significantly increase his fiscal breathing room.
Only in Case 3 should a "free" $50 make a difference in one's spending patterns. Sheila would be better off spending it on food, medicine, or debt reduction; and Carrie is probably already a donor to SIAI (or whatever). However, even for Malcolm, spending the $50 as though there were no alternative use would be imprudent.
The unbudgeted $50 has various possible uses, some of which are better than others. You seem to be saying that a budgeter can, without a utility penalty, spend the new money on __ as though there were no alternative uses to the one suggested in the original post. Is this your intention?
It has to do with mental accounting. For someone who is a) like all humans, a bounded rationalist, and b) like most humans, does not donate nearly enough (from a utilitarian perspective) to charity, a catchy idea to donate unbudgeted money could spur an increase in donation.
In particular, taking a donation out of money you previously thought you would use hurts. Taking a donation out of money you did not know about before does not hurt.
Exactly. I'm sure this phenomenon has been studied and documented somewhere but I don't know what it's called.
Typically they refer to these as "windfall gains," and there seems to be significant psychological literature that uses that term.
Ah, yes! I'll be studying that literature now thanks to you!
Also consider the case where Carrie doesn't donate to charity at all but decides to bite the bullet in response to this post.