Author(s)

• Daniel Hungerman
• Mark Ottoni-Wilhelm

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Abstract

There are independent literatures in economics considering tax-price and match-price incentives for giving. The match-price literature has produced well-identified small price elasticities, but scholars have widely questioned whether these estimates can inform tax policy. The tax-price literature in contrast has produced a large range of estimates. Here, we explore and compare these different incentives. First, we consider tax incentives for giving by focusing on a state-level tax credit that creates a convex kink. We use traditional, as well as more novel, kink methods to estimate the tax-price elasticity of giving. Second, a subgroup of donors in our data were temporarily offered a match for their gifts, creating an opportunity to compare tax-price and match-price effects for the same group of donors giving to the same organization at the same time. We find the tax-price elasticity is about -.2. The match-price elasticity is essentially the same. Our results thus suggest a small tax-price elasticity, close to the match-price elasticity, and close to match-price elasticity estimates in the experimental match-price literature. The implication is that in the giving environment we investigate the match-price elasticity is informative for tax policy.