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Does One Charitable Contribution Come at the Expense of Another?

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  • Reinstein David A

    () (University of Essex)

Abstract

This paper defines, discusses, and measures “expenditure substitution” in charitable giving. Motivated by a model of conditional demand, I consider the extent to which a “temporary shock” that increases an individual's donation to one cause by a particular amount displaces her gifts to other charitable causes. I use the 2001-2007 waves of the PSID/COPPS, the first data set of its kind, to identify this. Households that give more to one type of charity tend to give more to others. However, many of the correlations between the residuals after fixed-effects regressions are negative and significant, particularly for larger donors and for certain categories of charitable giving. Given plausible econometric assumptions, the negative correlations are strong evidence of expenditure substitution. Overall, these results suggest heterogeneous motivations for giving: small givers may be mainly driven by temporary shocks and personal appeals while larger givers may have concave multi-charity warm-glow preferences.

Suggested Citation

  • Reinstein David A, 2011. "Does One Charitable Contribution Come at the Expense of Another?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-54, June.
  • Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:40
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    References listed on IDEAS

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    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. 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.
    3. James Andreoni & Eleanor Brown & Isaac Rischall, 2003. "Charitable Giving by Married Couples Who Decides and Why Does it Matter?," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    4. repec:eee:ijrema:v:26:y:2009:i:3:p:180-188 is not listed on IDEAS
    5. Duncan, Brian, 2004. "A theory of impact philanthropy," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2159-2180, August.
    6. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    7. Montmarquette, Claude & Monty, Luc, 1987. "An Empirical Model of a Household's Choice of Activities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 2(2), pages 145-158, April.
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    Citations

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    Cited by:

    1. Yörük, Barış K., 2014. "Does giving to charity lead to better health? Evidence from tax subsidies for charitable giving," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 71-83.
    2. Kellner, Christian & Reinstein, David & Riener, Gerhard, 2015. "Stochastic income and conditional generosity," DICE Discussion Papers 197, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. repec:bri:cmpowp:13/336 is not listed on IDEAS
    4. Gani Aldashev & Marco Marini & Thierry Verdier, 2017. "Samaritan Bundles: Inefficient Clustering in NGO Projects," Working Papers 6/17, Sapienza University of Rome, DISS.
    5. repec:esx:essedp:762 is not listed on IDEAS
    6. repec:bri:cmpowp:14/336 is not listed on IDEAS
    7. Duquette, Nicolas J., 2016. "Do tax incentives affect charitable contributions? Evidence from public charities' reported revenues," Journal of Public Economics, Elsevier, vol. 137(C), pages 51-69.
    8. Null, C., 2011. "Warm glow, information, and inefficient charitable giving," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 455-465, June.
    9. Christian Keller & David Reinstein & Gerhard Riener & Michael Sanders, 2015. "Giving and Probability," The Centre for Market and Public Organisation 15/336, Department of Economics, University of Bristol, UK.
    10. Sarah Smith & Kimberley Scharf & Mark Ottoni-Wilhelm, 2017. "Lift and shift: the effect of fundraising interventions in charity space and time," IFS Working Papers W17/20, Institute for Fiscal Studies.
    11. Jonathan Meer, 2009. "Brother Can You Spare a Dime? Peer Effects in Charitable Solicitation," Discussion Papers 08-035, Stanford Institute for Economic Policy Research.
    12. Krieg, Justin & Samek, Anya, 2017. "When charities compete: A laboratory experiment with simultaneous public goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 40-57.
    13. Karlan, Dean & Wood, Daniel H., 2017. "The effect of effectiveness: Donor response to aid effectiveness in a direct mail fundraising experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 1-8.
    14. Reinstein, David, 2014. "The Economics of the Gift," Economics Discussion Papers 10009, University of Essex, Department of Economics.
    15. Christian Kellner & David Reinstein & Gerhard Riener, 2017. "Conditional generosity and uncertain income: Evidence from five experiments," Discussion Papers 1707, Exeter University, Department of Economics.
    16. Bittschi, Benjamin & Borgloh, Sarah & Moessinger, Marc-Daniel, 2016. "On tax evasion, entrepreneurial generosity and fungible assets," ZEW Discussion Papers 16-024, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    17. Kimberley Ann Scharf & Sarah Smith & Mark Ottoni-Wilhelm, 2017. "Lift and Shift: The Effect of Fundraising Interventions in Charity Space and Time," CESifo Working Paper Series 6694, CESifo Group Munich.
    18. Barış K. Yörük, 2013. "The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1708-1721, December.
    19. Bittschi, Benjamin & Borgloh, Sarah & Wigger, Berthold U., 2016. "Philanthropy in a secular society," ZEW Discussion Papers 16-021, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    20. repec:esx:essedp:749 is not listed on IDEAS
    21. Bittschi, Benjamin & Borgloh, Sarah & Wigger, Berthold, 2015. "Secularization, tax policy and prosocial behavior," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113065, Verein für Socialpolitik / German Economic Association.
    22. Lionel Richefort, 2017. "Warm-Glow Giving in Networks with Multiple Public Goods," Working Papers 2017.32, Fondazione Eni Enrico Mattei.

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