On the Crowding-Out Effects of Tax-Financed Charitable Contributions by the Government

Alan Krause

Discussion Papers from Department of Economics, University of York

Abstract: An 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.

Keywords: Charitable contributions; warm-glow; crowding out; public goods (search for similar items in EconPapers)
JEL-codes: H23 H41 (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-acc, nep-cbe, nep-exp and nep-pbe
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:11/01

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