Rebates Versus Matching: Does How We Subsidize Charitable Contributions Matter?

21 Pages Posted: 17 May 2011

See all articles by Catherine C. Eckel

Catherine C. Eckel

Texas A&M University

Philip J. Grossman

Monash University - Department of Economics

Date Written: March 1, 2003

Abstract

A rebate subsidy of rate sr is functionally equivalent to a matching subsidy of rate sm=sr/(1−sr). Other things equal, an individual should respond identically to the two subsidies. We test the effect on charitable giving of the framing of a subsidy as a rebate or as a match. Subjects make a series of ‘dictator’ allocation decisions, dividing an endowment between themselves and their chosen charities. Allocation decisions vary by the endowment level, the net price of giving, and the form of the subsidy. We find that contributions are significantly higher with matching subsidies than with rebate subsidies.

Suggested Citation

Eckel, Catherine C. and Grossman, Philip J., Rebates Versus Matching: Does How We Subsidize Charitable Contributions Matter? (March 1, 2003). Journal of Public Economics, Vol. 87, Nos. 3-4, pp. 781-801, 2003, Available at SSRN: https://ssrn.com/abstract=1843504

Catherine C. Eckel (Contact Author)

Texas A&M University ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Philip J. Grossman

Monash University - Department of Economics ( email )

Wellington Road
Clayton, 3800
Australia
61399020052 (Phone)

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