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Choosing Between Charitable Activities

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  • Naomi E. Feldman

    (BGU)

Abstract

This paper analyzes the impact of a preferential tax-price for monetary donations on the joint decision to donate time (volunteer) and money. Using results from a structural model and data from a national survey on household charitable giving behavior, I simulate the effects of a government policy that would increase eligibility for a preferential tax treatment of monetary donations on donations of both charitable goods. The results show that donations of time and money are substitutes in the traditional sense?as the tax-price of a dollar of monetary donations decreases, the probability of donating time also decreases. However, the results also show that a decrease in the tax price of monetary donations also has a positive direct effect on donations of time, in contrast to the substitution effect. This positive direct effect more than offsets the substitution effect leading to an increase in the proportion of individuals who donate both time and money as the tax-price of monetary donations falls.

Suggested Citation

  • Naomi E. Feldman, 2005. "Choosing Between Charitable Activities," Working Papers 0516, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:0516
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Charitable giving; volunteering;

    JEL classification:

    • 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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