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Tax-price elasticities of charitable giving and selection of reporting: panel study of South Korea

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  • Hiroki Kato
  • Tsuyoshi Goto
  • Youngrok Kim

Abstract

In this study, we estimate the tax-price elasticity of charitable giving and address the bias caused by the existence of unreported donations and self-selection regarding reporting on giving. To eliminate this bias, we propose a simple estimation method based on intention-to-treat analysis. Using our proposed method and the exogenous variation in tax incentives in the 2014 South Korean tax reform, we estimate the price elasticity to be −3.5 for the amount of total giving, which is more elastic than that in the standard results that do not account for unreported donations and self-selection. This result implies that the 2014 tax reform reduced the total amount of giving and that tax incentives should be expanded.

Suggested Citation

  • Hiroki Kato & Tsuyoshi Goto & Youngrok Kim, 2025. "Tax-price elasticities of charitable giving and selection of reporting: panel study of South Korea," Oxford Economic Papers, Oxford University Press, vol. 77(3), pages 829-848.
    • Handle: RePEc:oup:oxecpp:v:77:y:2025:i:3:p:829-848.
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    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • 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

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