Presidential Approval Crowds Out Charitable Donations

26 Pages Posted: 10 Mar 2022

See all articles by Bouke Klein Teeselink

Bouke Klein Teeselink

Yale School of Management

Georgios Melios

London School of Economics & Political Science (LSE) - Department of Psychological and Behavioural Science; University College London

Date Written: February 22, 2022

Abstract

A large literature in public economics seeks to answer whether government activity crowds out charitable donations. The empirical evidence is mixed, however, and prior estimates range from large crowding out effects to small crowding in effects. To resolve this inconsistency, we consider that people base their donation decisions not only on government spending per se, but also on their support of the government. Using US tax return data, we find that support for the incumbent president crowds out charitable donations for partisans on both sides of the spectrum. The reduction in donations is consistent with partisans attributing greater problem-solving responsibilities to own-party governments. Taken together, our results demonstrate the importance of non-monetary considerations for crowding out, and suggest a possible mechanism to square the inconsistent empirical results of previous studies.

Keywords: Crowding out, Charities, Donations, Partisanship, Beliefs

JEL Classification: D10, D31, D64, D72

Suggested Citation

Klein Teeselink, Bouke and Melios, Georgios, Presidential Approval Crowds Out Charitable Donations (February 22, 2022). Available at SSRN: https://ssrn.com/abstract=4040969 or http://dx.doi.org/10.2139/ssrn.4040969

Bouke Klein Teeselink

Yale School of Management ( email )

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Georgios Melios (Contact Author)

London School of Economics & Political Science (LSE) - Department of Psychological and Behavioural Science ( email )

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55/56 Lincoln's Inn
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University College London ( email )

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