Rebate versus matching: Does how we subsidize charitable contributions matter?

Catherine C. Eckel, Philip J. Grossman

Research output: Contribution to journalArticleResearchpeer-review

165 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)681-701
Number of pages21
JournalJournal of Public Economics
Volume87
Issue number3-4
DOIs
Publication statusPublished - 1 Mar 2003

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