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Do the rich substitute political giving for charitable giving?

Author

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  • Cagé, Julia
  • Guillot, Malka

Abstract

This article studies the relationship between charitable and political giving, and estimates the degree of substitutability between the two, focusing on wealthy households. Using exhaustive administrative tax data covering all French households between 2006 and 2021, we exploit the 2017 reform that replaced the wealth tax with a real-estate tax. This reform increased the effective price of charitable giving for households that were previously liable but are no longer liable, while leaving the price of political donations unchanged. This unique setting allows us to estimate the cross-price elasticity of political donations with respect to the price of charitable giving through an instrumented Difference-in-Differences approach. According to our estimates, a 10% increase in the price of charitable giving leads to a 0.18 p.p. increase in the propensity to make a political donation, and to a large rise (corresponding to 3% of the mean) in the amount given conditional on giving. We finally discuss the possible mechanisms behind this substitutability, and provide suggestive evidence indicating that some charitable giving may have been politically motivated from the outset.

Suggested Citation

  • Cagé, Julia & Guillot, Malka, 2026. "Do the rich substitute political giving for charitable giving?," Journal of Public Economics, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:pubeco:v:256:y:2026:i:c:s0047272726000289
    DOI: 10.1016/j.jpubeco.2026.105592
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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy

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