Does One Contribution Come at the Expense of Another? Empirical Evidence on Substitution Between Charitable Donations
AbstractIn this paper I estimate and describe the extent to which an individual's charitable donation to one cause displaces his or her giving to another cause. I use the 2001 and 2003 waves of the Panel Study of Income Dynamics (PSID), in conjunction with the Center on Philanthropy Panel Study (COPPS). This is the first useful major source of panel data on giving to multiple causes. I control for individual-fixed effects and use "college-reunion year" as an instrument for giving to education. I find an economically and statistically significant level of substitution. I also analyze the net effect of shocks to giving to one category on giving to all other categories - testing the extremes of a fixed purse (perfect crowding-out) and zero-crowding-out. While the uninstrumented regressions can generally reject perfect crowding out, the instrumental results (with larger error bounds) do not. I also find a greater level of substitution for "large givers" than for those who make smaller donations. This points to a model with heterogenous motivations for giving: small givers may be driven by shocks and reputation concerns, while for larger givers charities are imperfect substitutes in providing "warm glow" utility.
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 University of Essex, Department of Economics in its series Economics Discussion Papers with number 618.
Date of creation: 04 Oct 2006
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-07 (All new papers)
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.:
- Frey, Bruno S. & Meier, Stephan, 2004. "Pro-social behavior in a natural setting," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 65-88, May.
- Martin, Richard & Randal, John, 2008. "How is donation behaviour affected by the donations of others?," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 228-238, July.
- Hungerman, Daniel M., 2005. "Are church and state substitutes? Evidence from the 1996 welfare reform," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2245-2267, December.
- Payne, A. Abigail, 1998. "Does the government crowd-out private donations? New evidence from a sample of non-profit firms," Journal of Public Economics, Elsevier, vol. 69(3), pages 323-345, September.
- Craig Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2005.
"Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment,"
NBER Working Papers
11611, National Bureau of Economic Research, Inc.
- Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2006. "Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 747-782, May.
- Craig Landry & Andreas Lange & John List & Michael Price & Nicholas Rupp, 2006. "Toward an understanding of the economics of charity: Evidence from a field experiment," Natural Field Experiments 00292, The Field Experiments Website.
- Eckel, Catherine C. & Grossman, Philip J. & Johnston, Rachel M., 2005. "An experimental test of the crowding out hypothesis," Journal of Public Economics, Elsevier, vol. 89(8), pages 1543-1560, August.
- Wilhelm, Mark O., 2006. "New data on charitable giving in the PSID," Economics Letters, Elsevier, vol. 92(1), pages 26-31, July.
- Diepen, M. van & Donkers, A.C.D. & Franses, Ph.H.B.F., 2006. "Irritation Due to Direct Mailings from Charities," Research Paper ERS-2006-029-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
- Null, C., 2011. "Warm glow, information, and inefficient charitable giving," Journal of Public Economics, Elsevier, vol. 95(5), pages 455-465.
- Meer, Jonathan, 2011.
"Brother, can you spare a dime? Peer pressure in charitable solicitation,"
Journal of Public Economics,
Elsevier, vol. 95(7-8), pages 926-941, August.
- Meer, Jonathan, 2011. "Brother, can you spare a dime? Peer pressure in charitable solicitation," Journal of Public Economics, Elsevier, vol. 95(7), pages 926-941.
- David Reinstein, 2007. "Substitution Between (and Motivations for) Charitable Contributions: An Experimental Study," Economics Discussion Papers 648, University of Essex, Department of Economics.
- Null, C., 2011. "Warm glow, information, and inefficient charitable giving," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 455-465, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Essex Economics Web Manager).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.