More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK
More Giving of More Givers? The Effects of Tax Incentives on Charitable Donations in the UK
335/2017 Miguel Almunia, Ben Lockwood and Kimberley Scharf
This paper estimates the tax-price elasticity of giving using UK administrative tax return data, exploiting variation from a large tax reform. We estimate both the in- tensive and extensive margin elasticity, using a novel instrumental variables strategy. Then, we derive new conditions to evaluate the welfare consequences of changes in the generosity of the subsidy to donations. We find a small intensive-margin elasticity of -0.2 and a substantial extensive-margin elasticity of -0.8, yielding a total elasticity of about -1. These estimates mask considerable heterogeneity: high-income individuals respond more on the intensive margin, while the extensive-margin response is stronger among low-income taxpayers.
Behavioural Economics and Wellbeing
Journal of Public Economics
https://doi.org/10.1016/j.jpubeco.2019.104114