Rational Inattention to Subsidies for Charitable Contributions
AbstractEvidence shows that individuals do not always take tax attributes into account when making their choices. We focus on tax relief for charitable contributions. Although rational donors should view a match and a rebate of the same value as being equivalent, survey evidence shows that nominal donations are more likely to adjust in response to a change in the rebate than to a corresponding change in the match. We argue that these patterns are consistent with the predictions of a model of rational inattention, whereby a majority of individuals choose to process rebate changes while forgoing to process match changes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 02.
Date of creation: 2010
Date of revision:
Contact details of provider:
Postal: CV4 7AL COVENTRY
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/
More information through EDIRC
Salience of Taxes and Subsidies; Rational Inattention;
Other versions of this item:
- Kimberly Scharf & Sarah Smith, 2011. "Rational Inattention to Subsidies for Charitable Contributions," The Centre for Market and Public Organisation 11/269, Department of Economics, University of Bristol, UK.
- Scharf, Kimberley Ann & Smith, Sarah L., 2010. "Rational Inattention to Subsidies for Charitable Contributions," CEPR Discussion Papers 7760, C.E.P.R. Discussion Papers.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- D0 - Microeconomics - - General
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn W. Harrison & John A. List, 2004.
Journal of Economic Literature,
American Economic Association, vol. 42(4), pages 1009-1055, December.
- Andreoni,J. & Payne,A.A., 2001.
"Government grants to private charities : do they crowd out giving or fundraising?,"
19, Wisconsin Madison - Social Systems.
- James Andreoni & A Abigail Payne, 2001. "Government Grants to Private Charities: Do They Crowd-Out Giving or Fundraising?," Public Economics 0111001, EconWPA.
- Douglas D. Davis & Edward L. Millner, 2004.
"Rebates, Matches, and Consumer Behavior,"
0401, VCU School of Business, Department of Economics.
- Dean Karlan & John A. List, 2006.
"Does Price Matter in Charitable Giving? Evidence From a Large-Scale Natural Field Experiment,"
NBER Working Papers
12338, National Bureau of Economic Research, Inc.
- 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.
- Dean Karlan & John List, 2006. "Does price matter in charitable giving? Evidence from a large-scale natural field experiment," Natural Field Experiments 00279, The Field Experiments Website.
- Dean Karlan & John A. List, 2006. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," Working Papers 1, The Field Experiments Website.
- Karlan, Dean & List, John, 2006. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," Working Papers 13, Yale University, Department of Economics.
- Catherine Eckel & Philip Grossman, 2008. "Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies," Experimental Economics, Springer, vol. 11(3), pages 234-252, September.
- Xavier Gabaix & David Laibson, 2006.
"Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,"
The Quarterly Journal of Economics,
MIT Press, vol. 121(2), pages 505-540, May.
- Gabaix, Xavier & Laibson, David I., 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Scholarly Articles 4554333, Harvard University Department of Economics.
- Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc.
- Raj Chetty & Adam Looney & Kory Kroft, 2009.
"Salience and taxation: theory and evidence,"
Finance and Economics Discussion Series
2009-11, Board of Governors of the Federal Reserve System (U.S.).
- 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.
- Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486, July.
- 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.
- Jennifer Brown & Tanjim Hossain & John Morgan, 2010. "Shrouded Attributes and Information Suppression: Evidence from the Field," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 859-876, May.
- Charles T. Clotfelter, 1985. "Federal Tax Policy and Charitable Giving," NBER Books, National Bureau of Economic Research, Inc, number clot85-1.
- Johansson-Stenman Olof & Svedsäter Henrik, 2008. "Measuring Hypothetical Bias in Choice Experiments: The Importance of Cognitive Consistency," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-10, September.
- Sarah Smith, 2012.
"Increasing charitable giving – what can we learn from economics?,"
The Centre for Market and Public Organisation
12/291, Department of Economics, University of Bristol, UK.
- Sarah Smith, 2012. "Increasing Charitable Giving: What Can We Learn from Economics?," Fiscal Studies, Institute for Fiscal Studies, vol. 33(4), pages 449-466, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Snape).
If references are entirely missing, you can add them using this form.