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Charity, Impure Altruism, and Marginal Redistributions of Income

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  • Allgood, Sam

Abstract

Warm–glow utility mitigates concerns that public giving crowds–out private giving dollar–for–dollar. Warm glow also means that utility is decreasing in the giving of others, ceteris paribus, and the willingness to pay for altruism is smaller (at the margin) if altruistic households have a positive willingness to pay for warm glow. Consequently, a marginal redistribution of income that passes the Pareto test may fail the test if altruistic households receive warm glow. Numerical evaluation shows that passing the Pareto test is very sensitive to cross–price elasticities between charity and labor supply, the elasticity of charity with respect to warm glow, the tax rate of the rich, and the fraction of the population that is rich.

Suggested Citation

  • Allgood, Sam, 2009. "Charity, Impure Altruism, and Marginal Redistributions of Income," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(2), pages 219-235, June.
    • Handle: RePEc:ntj:journl:v:62:y:2009:i:2:p:219-35
    DOI: 10.17310/ntj.2009.2.02
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    Cited by:

    1. Yamamura, Eiji & Tsutsui, Yoshiro & Ohtake, Fumio, 2018. "Altruistic and selfish motivations of charitable giving: The case of the hometown tax donation system (Furusato nozei) in Japan," MPRA Paper 86181, University Library of Munich, Germany.
    2. Ambrose Leung & Cheryl Kier & Tak Fung & Linda Fung & Robert Sproule, 2011. "Searching for Happiness: The Importance of Social Capital," Journal of Happiness Studies, Springer, vol. 12(3), pages 443-462, June.
    3. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2017. "Altruistic and selfish motivations of charitable giving:Case of the hometown tax donation system in Japan," ISER Discussion Paper 1003, Institute of Social and Economic Research, Osaka University.
    4. Eiji Yamamura & Yoshiro Tsutsui & Fumio Ohtake, 2023. "An analysis of altruistic and selfish motivations underlying hometown tax donations in Japan," The Japanese Economic Review, Springer, vol. 74(1), pages 29-55, January.
    5. Penz, R. Frederic & Hörisch, Jacob & Tenner, Isabell, 2022. "Investors in environmental ventures want good money—and a clean conscience: How framing, interest rates, and the environmental impact of crowdlending projects influence funding decisions," Technological Forecasting and Social Change, Elsevier, vol. 182(C).

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