More Giving or More Givers? The Effects of Tax Incentives on Charitable Donations in the UK

Wealth Taxation and Charitable Giving

“…A coefficient of -0.0124 for log household gross income implies the following: a 50% increase in household income is associated with a reduction in the magnitude of the price elasticity of giving of 0.0124 × 0.5 × 7 = 0.0434. This negative effect is not trivial compared to the unconditional elasticity of -0.38, and not fully compatible with the intensive margin results reported in Bakija and Heim (2011) and Almunia et al (2020), both pointing to increasing responsiveness with respect to income. However, Almunia et al (2020) find that both price and income elasticities fall with respect to income at the extensive margin (of charitable giving).…”

“…This negative effect is not trivial compared to the unconditional elasticity of -0.38, and not fully compatible with the intensive margin results reported in Bakija and Heim (2011) and Almunia et al (2020), both pointing to increasing responsiveness with respect to income. However, Almunia et al (2020) find that both price and income elasticities fall with respect to income at the extensive margin (of charitable giving). These differences may likely be explained by differences in the reporting regimes.…”

“…WhileBakija and Heim (2011) conclude that the price elasticity is close to -1,Randolph (1995) report estimates ranging from -0.3 to -0.5. Our estimate is larger than the intensive margin elasticity of -0.2 found byAlmunia et al (2020), based on U.K. data, but close to that found byFack and Landais (2010), with data from France.5 Cage and Guillot (2021) exploit a wealth tax reform that has direct effects on the after-tax price of giving. More specifically, they use the removal of a charity wealth-tax deduction to study the price sensitivity of substitution between support to charities and political parties.…”

“…We further add to the body of research on the role of tax incentives in charitable giving. This literature is particularly concerned with the price elasticity of giving (see, e.g., Feldstein 1975;Randolph 1995;Auten et al 2002;Meer 2014;Meer and Priday 2020;Bakija and Heim 2011;Fack and Landais 2010;Duquette 2016;Almunia et al 2020;Hungerman and Ottoni-Wilhelm 2021;and Cage and Guillot 2021). Our most direct contribution is to estimate the tax price elasticity using a methodology that is new to this literature, in combination with third-party reported data on giving.…”

Out of the shadows: Impact of SARS experience on Chinese netizens' willingness to donate for COVID-19 pandemic prevention and control

“…Donation decisions are likely influenced by tax incentives ( Almunia, Guceri, Lockwood, & Scharf, 2020 ), priority rule ( Kessler & Roth, 2014 ), information ( Metzger & Günther, 2019 ), media exposure ( Aldashev, Limardi, & Verdier, 2015 ), economic income status ( Auten, Sieg, & Clotfelter, 2002 ), firm-government relationship ( Long & Yang, 2016 ), supplier heterogeneous perceptions ( Yang, Yao, He, & Ou, 2019 ), and other exogenous factors. Recently, some studies have explored the impact of public health emergencies on individual behavior decision-making.…”