On the Crowding-Out Effects of Tax-Financed Charitable Contributions by the Government
AbstractAn important question in the literature on charitable contributions is the extent to which tax-financed contributions by the government crowd out private contributions. This paper examines a simple model of charitable contributions in which there exist both warm-glow and public good motives for giving, but where the warm-glow motive is competitive in the sense that individuals evaluate their own contribution relative to that of their peers. It is shown that the competitive element of the warm-glow motive may exacerbate or attenuate the crowding-out effect, depending upon certain preference and income parameters. However, as the warm-glow motive for giving becomes purely competitive, crowding out is exacerbated and is almost dollar-for-dollar.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 11/01.
Date of creation: Jan 2011
Date of revision:
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
Phone: (0)1904 323776
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Charitable contributions; warm-glow; crowding out; public goods;
Find related papers by JEL classification:
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-01-16 (Accounting & Auditing)
- NEP-ALL-2011-01-16 (All new papers)
- NEP-CBE-2011-01-16 (Cognitive & Behavioural Economics)
- NEP-EXP-2011-01-16 (Experimental Economics)
- NEP-PBE-2011-01-16 (Public Economics)
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