Private versus Public Charity: Reassessing Crowding Out from the Supply Side

J. Stephen Ferris and Edwin G West

Public Choice, 2003, vol. 116, issue 3-4, 399-417

Abstract: This paper tests a model where government and private charity are perfect substitutes in consumption, but the cost of providing charitable assistance differs between private and government suppliers. The analysis demonstrates that higher costs of transferring through the government can account for the observed phenomenon of less than complete crowding out and the empirical results are broadly consistent with that approach. Overall the evidence is consistent with the hypothesis that individuals both care about the leakages involved in transferring funds to the poor through government and respond in their private giving to changes in the differential public cost. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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