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Secularization, tax policy and prosocial behavior

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  • Bittschi, Benjamin
  • Borgloh, Sarah
  • Wigger, Berthold

Abstract

Using German administrative income tax data we investigate economic consequences of an increasingly secular society for prosocial behavior. For this purpose, we establish initially a simple household model to formalize the relationship between religious giving in form of the German church tax and other tax deductible donations. We test the model hypotheses empirically and compare how income and the tax-price of giving differ as incentives to give between individuals leaving church and church members. While we find evidence for crowding in between religious giving and other donations for church members, we do not observe such a relation for church leavers. Moreover, donation behavior of church-leavers is much more responsive to tax incentives of charitable giving compared to church members. Moreover, we find that non-donors have a significantly increased probability of leaving church compared to donors. We trace this results back to the fact that non-donors are not able to compensate higher church taxes by reducing their donations.

Suggested Citation

  • Bittschi, Benjamin & Borgloh, Sarah & Wigger, Berthold, 2015. "Secularization, tax policy and prosocial behavior," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113065, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc15:113065
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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