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Trust, Ability-to-Pay, and Charitable Giving

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  • Paul Missios

    (Department of Economics, Ryerson University, Toronto, Canada)

  • Ida Ferrara

    (Department of Economics, York University, Toronto, Canada)

Abstract

In the literature on privately provided public goods, altruism has been motivated by what contributions can accomplish (public goods philanthropy), by the pleasure of giving (warm-glow philanthropy), or by the desire to personally make a difference (impact philanthropy). We revisit these motives but allow for income heterogeneity and distrust in the institutional structures involved. We also model socially motivated philanthropy when income-heterogeneous donors take trust and ability-to-pay into account. We show key differences across the four models in terms of crowding out and in the effects of income distribution. In the socially motivated model, low-income donors may contribute more than high-income donors, giving theoretical foundation to the frequently observed "U-shaped" pattern of giving.

Suggested Citation

  • Paul Missios & Ida Ferrara, 2015. "Trust, Ability-to-Pay, and Charitable Giving," Working Papers 061, Ryerson University, Department of Economics.
    • Handle: RePEc:rye:wpaper:wp061
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    2. James Alm & Raul A. Barreto, 2024. "Trust in Government in a Changing World: Shocks, Tax Evasion, and Economic Growth," Working Papers 2405, Tulane University, Department of Economics.

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    More about this item

    Keywords

    Philanthropy; Social Motivation; Trust; Ability to Pay; Crowding Out.;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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