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Does One Charitable Contribution Come at the Expense of Another?

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  • Reinstein David A

    ()
    (University of Essex)

Abstract

This paper defines, discusses, and measures “expenditure substitution” in charitable giving. Motivated by a model of conditional demand, I consider the extent to which a “temporary shock” that increases an individual's donation to one cause by a particular amount displaces her gifts to other charitable causes. I use the 2001-2007 waves of the PSID/COPPS, the first data set of its kind, to identify this. Households that give more to one type of charity tend to give more to others. However, many of the correlations between the residuals after fixed-effects regressions are negative and significant, particularly for larger donors and for certain categories of charitable giving. Given plausible econometric assumptions, the negative correlations are strong evidence of expenditure substitution. Overall, these results suggest heterogeneous motivations for giving: small givers may be mainly driven by temporary shocks and personal appeals while larger givers may have concave multi-charity warm-glow preferences.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (June)
Pages: 1-54

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:40

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Cited by:
  1. Jonathan Meer, 2009. "Brother Can You Spare a Dime? Peer Effects in Charitable Solicitation," Discussion Papers 08-035, Stanford Institute for Economic Policy Research.
  2. Baris Yoruk, 2012. "The impact of charitable subsidies on religious giving and attendance: Evidence from panel data," Discussion Papers 12-06, University at Albany, SUNY, Department of Economics.
  3. Null, C., 2011. "Warm glow, information, and inefficient charitable giving," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 455-465, June.
  4. David Reinstein, 2014. "The Economics of the Gift," Economics Discussion Papers 749, University of Essex, Department of Economics.

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