IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_9558.html
   My bibliography  Save this paper

Vice and Virtue Behaviors: Disentangling Substitution and Direct Effects of the Price of Giving

Author

Listed:
  • Alexander D. Cornish
  • Stephanie A. Heger

Abstract

We examine how the U.S. tax policy that encourages charitable giving also affects seemingly unrelated virtue and vice behaviors: exercise and smoking. Using the Panel Study of Income Dynamics, we calculate tax liabilities for 16,712 individuals over 5 waves from which we can construct the price of giving to charity. We estimate the structural model of joint consumption developed by DiNardo and Lemieux (1992, 2001) to disentangle how changes in the price of giving affects exercise and smoking through two distinct channels:(1) an indirect effect through classical substitution effects and (2) a direct effect of the price of giving on the implicit price of exercise and smoking. Contrary to reduced form results which confound these two effects, we find that charitable giving and exercise are substitutes, but that the negative direct effect of the price of giving on exercise dominates. Similarly, charitable giving and smoking are also substitutes, but there is no significant direct effect of the price of giving on smoking behavior. Our results demonstrate the breadth of the effects of tax policy on charitable giving and suggest how policy may be more efficiently designed to increase virtuous behaviors.

Suggested Citation

  • Alexander D. Cornish & Stephanie A. Heger, 2022. "Vice and Virtue Behaviors: Disentangling Substitution and Direct Effects of the Price of Giving," CESifo Working Paper Series 9558, CESifo.
    • Handle: RePEc:ces:ceswps:_9558
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9558.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gruber, Jonathan, 2004. "Pay or pray? The impact of charitable subsidies on religious attendance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2635-2655, December.
    2. DiNardo, John & Lemieux, Thomas, 2001. "Alcohol, marijuana, and American youth: the unintended consequences of government regulation," Journal of Health Economics, Elsevier, vol. 20(6), pages 991-1010, November.
    3. Clotfelter, Charles T., 1980. "Tax incentives and charitable giving: evidence from a panel of taxpayers," Journal of Public Economics, Elsevier, vol. 13(3), pages 319-340, June.
    4. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 351-362, June.
    5. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    6. Jon Bakija, 2013. "Tax Policy and Philanthropy: A Primer on the Evidence for the U.S. and its Implications," Department of Economics Working Papers 2013-01, Department of Economics, Williams College.
    7. Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.
    8. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    9. Jonathan Meer & Benjamin A. Priday, 2019. "Tax Prices and Charitable Giving: Projected Changes in Donations Under the 2017 TCJA," NBER Working Papers 26452, National Bureau of Economic Research, Inc.
    10. Lacetera, Nicola & Macis, Mario, 2010. "Social image concerns and prosocial behavior: Field evidence from a nonlinear incentive scheme," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 225-237, November.
    11. Jon Bakija & Bradley Heim, 2008. "How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation," NBER Working Papers 14237, National Bureau of Economic Research, Inc.
    12. Jen Shang & Rachel Croson, 2009. "A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods," Economic Journal, Royal Economic Society, vol. 119(540), pages 1422-1439, October.
    13. Peter G. Backus & Nicky L. Grant, 2019. "How sensitive is the average taxpayer to changes in the tax-price of giving?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 317-356, April.
    14. Clotfelter, Charles T, 1980. "Tax Incentives and Charitable Giving: Evidence from a Panel of Taxpayers," Empirical Economics, Springer, vol. 13(3), pages 319-340, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heger, Stephanie A. & Slonim, Robert, 2022. "Giving begets giving: Positive path dependence as moral consistency," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 699-718.
    2. Stephanie A. Heger & Robert Slonim, 2022. "Altruism Begets Altruism," CESifo Working Paper Series 9522, CESifo.
    3. Heger, Stephanie A. & Slonim, Robert & Tausch, Franziska & Tymula, Agnieszka, 2021. "Altruism among consumers as donors," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 611-622.
    4. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-180, Spring.
    5. John A. List & James J. Murphy & Michael K. Price & Alexander G. James, 2019. "Do Appeals to Donor Benefits Raise More Money than Appeals to Recipient Benefits? Evidence from a Natural Field Experiment with Pick.Click.Give," NBER Working Papers 26559, National Bureau of Economic Research, Inc.
    6. Backus, Peter, 2010. "Is charity a homogeneous good?," Economic Research Papers 270773, University of Warwick - Department of Economics.
    7. Backus, Peter, 2010. "Is charity a homogeneous good?," The Warwick Economics Research Paper Series (TWERPS) 951, University of Warwick, Department of Economics.
    8. Catherine Eckel, 2005. "Subsidizing Charitable Contributions: A Field Test Comparing Matching and Rebate Subsidies," Working Papers 2098, The Field Experiments Website.
    9. Jonathan Meer & Benjamin A. Priday, 2020. "Tax Prices and Charitable Giving: Projected Changes in Donations under the 2017 Tax Cuts and Jobs Act," Tax Policy and the Economy, University of Chicago Press, vol. 34(1), pages 113-138.
    10. Steffen Altmann & Armin Falk & Paul Heidhues & Rajshri Jayaraman & Marrit Teirlinck, 2019. "Defaults and Donations: Evidence from a Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 808-826, December.
    11. Drouvelis, Michalis & Marx, Benjamin M., 2018. "Prosociality spillovers of working with others," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 205-216.
    12. Feine, Gregor & Groh, Elke D. & von Loessl, Victor & Wetzel, Heike, 2021. "The double dividend of social information in charitable giving: Evidence from a framed field experiment," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242437, Verein für Socialpolitik / German Economic Association.
    13. Tetsuya KAWAMURA & Takanori Ida & Kazuhito Ogawa, 2018. "Simultaneous Effect of Monetary and Non-Monetary Interventions on Crowd-Funding Field Experimental Evidence:R&D in New Sources of Energy," Discussion papers e-18-005, Graduate School of Economics , Kyoto University.
    14. Feine, Gregor & Groh, Elke D. & von Loessl, Victor & Wetzel, Heike, 2023. "The double dividend of social information in charitable giving: Evidence from a framed field experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 103(C).
    15. Kimberley Scharf & Sarah Smith, 2015. "The price elasticity of charitable giving: does the form of tax relief matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(2), pages 330-352, April.
    16. Deck, Cary & Murphy, James J., 2019. "Donors change both their level and pattern of giving in response to contests among charities," European Economic Review, Elsevier, vol. 112(C), pages 91-106.
    17. Chau Do & Irina Paley, 2012. "Altruism from the house: the impact of home equity on charitable giving," Review of Economics of the Household, Springer, vol. 10(3), pages 375-393, September.
    18. Indranil Goswami & Indranil Goswami, 2020. "No Substitute for the Real Thing: The Importance of In-Context Field Experiments in Fundraising," Marketing Science, INFORMS, vol. 39(6), pages 1052-1070, November.
    19. Adena, Maja, 2021. "How can we improve tax incentives for charitable giving? Lessons from field experiments in fundraising," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 344-353.
    20. Catherine C. Eckel & Philip J. Grossman, 2000. "Volunteers and Pseudo-Volunteers: The Effect of Recruitment Method in Dictator Experiments," Experimental Economics, Springer;Economic Science Association, vol. 3(2), pages 107-120, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_9558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.