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What is the Price Elasticity of Charitable Giving? Toward a Reconciliation of Disparate Estimates

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  • Daniel Hungerman
  • Mark Ottoni-Wilhelm

Abstract

There are independent literatures in economics considering tax-price and match-price incentives for giving. The match-price literature has produced well-identified small price elasticities, but scholars have widely questioned whether these estimates can inform tax policy. The tax-price literature in contrast has produced a large range of estimates. Here, we explore and compare these different incentives. First, we consider tax incentives for giving by focusing on a state-level tax credit that creates a convex kink. We use traditional, as well as more novel, kink methods to estimate the tax-price elasticity of giving. Second, a subgroup of donors in our data were temporarily offered a match for their gifts, creating an opportunity to compare tax-price and match-price effects for the same group of donors giving to the same organization at the same time. We find the tax-price elasticity is about -.2. The match-price elasticity is essentially the same. Our results thus suggest a small tax-price elasticity, close to the match-price elasticity, and close to match-price elasticity estimates in the experimental match-price literature. The implication is that in the giving environment we investigate the match-price elasticity is informative for tax policy.

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  • Daniel Hungerman & Mark Ottoni-Wilhelm, 2016. "What is the Price Elasticity of Charitable Giving? Toward a Reconciliation of Disparate Estimates," Artefactual Field Experiments 00557, The Field Experiments Website.
    • Handle: RePEc:feb:artefa:00557
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Almunia, Miguel & Guceri, Irem & Lockwood, Ben & Scharf, Kimberley, 2020. "More giving or more givers? The effects of tax incentives on charitable donations in the UK," Journal of Public Economics, Elsevier, vol. 183(C).
    4. Levin, Tova & Levitt, Steven D. & List, John A., 2023. "A Glimpse into the world of high capacity givers: Experimental evidence from a university capital campaign," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 644-658.
    5. 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.
    6. Tazhitdinova, Alisa, 2015. "Reducing Evasion Through Self-Reporting: Theory and Evidence from Charitable Contributions," MPRA Paper 81612, University Library of Munich, Germany, revised 2017.
    7. Ross Hickey & Bradley Minaker & A. Abigail Payne, 2019. "The Sensitivity of Charitable Giving to the Timing and Salience of Tax Credits," National Tax Journal, National Tax Association;National Tax Journal, vol. 72(1), pages 79-110, March.
    8. Tazhitdinova, Alisa, 2018. "Reducing evasion through self-reporting: Evidence from charitable contributions," Journal of Public Economics, Elsevier, vol. 165(C), pages 31-47.
    9. 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.
    10. Kavan Kucko & Kevin Rinz & Benjamin Solow, 2017. "Labor Market Effects of the Affordable Care Act: Evidence from a Tax Notch," CARRA Working Papers 2017-07, Center for Economic Studies, U.S. Census Bureau.

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