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More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK

Author

Listed:
  • Almunia, Miguel

    (University of Warwick)

  • Lockwood, Ben

    (University of Warwick)

  • Scharf, Kimberley

    (University of Birmingham)

Abstract

This paper estimates the tax-price elasticity of giving using UK administrative tax return data, exploiting variation from a large tax reform. We estimate both the intensive and extensive-margin elasticity, using a novel instrumental variables strategy. Then, we derive new conditions to evaluate the welfare consequences of changes in the generosity of the subsidy to donations. We find a small intensive-margin elasticity of -0.2 and a substantial extensive-margin elasticity of -0.8, yielding a total elasticity of about -1. These estimates mask considerable heterogeneity: high-income individuals respond more on the intensive margin, while the extensive-margin response is stronger among low-income taxpayers.

Suggested Citation

  • Almunia, Miguel & Lockwood, Ben & Scharf, Kimberley, 2017. "More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK," CAGE Online Working Paper Series 335, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:335
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    More about this item

    Keywords

    JEL Classification: H24; H31; D64;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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