IMPURE ALTRUISM AND DONATIONS TO PUBLIC GOODS: A THEORY OF WARM-GLOW GIVING*

When people make donations to privately provided public goods, such as charity, there may be many factors influencing their decision other than altruism. Social pressure, guilt, sympathy, or simply a desire for a "warm glow" may all be important. This paper considers such impure altruism formally and develops a wide set of implications. In particular, this paper discusses the invariance proposition of public goods, solves for the sufficient conditions for neutrality to hold, examines the optimal tax treatment of charitable giving, and calibrates the model based on econometric studies in order to consider policy experiments. Impure altruism is shown to be more consistent with observed patterns of giving than the conventional pure altruism approach, and to have policy implications that may differ widely from those of the conventional models. Copyright 1990 by Royal Economic Society.

[1]  R. Sugden.  Economics of Philanthropy , 1898, The Hospital.

[2]  M. Olson,et al.  The Logic of Collective Action , 1965 .

[3]  G. Becker.  A Theory of Social Interactions , 1974 .

[4]  Jean-Jacques Laffont,et al.  Macroeconomic Constraints, Economic Efficiency and Ethics: An Introduction to Kantian Economics , 1975 .

[5]  M. Feldstein.  THE INCOME TAX AND CHARITABLE CONTRIBUTIONS: PART I—AGGREGATE AND DISTRIBUTIONAL EFFECTS , 1975, National Tax Journal.

[6]  M. Feldstein,et al.  Tax incentives and charitable contributions in the United States: A microeconometric analysis , 1976 .

[7]  M. Feldstein,et al.  THE INCOME TAX AND CHARITABLE CONTRIBUTIONS , 1976 .

[8]  A. Sen,et al.  Rational Fools: A Critique of the Behavioral Foundations of Economic Theory , 1977 .

[9]  B. Abrams,et al.  The ‘crowding-out’ effect of governmental transfers on private charitable contributions , 1978 .

[10]  D. Collard,et al.  Altruism and Economy. A Study in Non-Selfish Economics. , 1979 .

[11]  M. Feldstein,et al.  A Contribution to the Theory of Tax Expenditures: The Case of Charitable Giving , 1980 .

[12]  K. Arrow.  Gifts and Exchanges , 1982 .

[13]  Peter Warr,et al.  Pareto optimal redistribution and private charity , 1982 .

[14]  Howard Margolis,et al.  Selfishness, altruism, and rationality , 1982 .

[15]  Peter Warr,et al.  The private provision of a public good is independent of the distribution of income , 1983 .

[16]  Russell D. Roberts,et al.  A Positive Model of Private Charity and Public Transfers , 1984, Journal of Political Economy.

[17]  M. Schmitz,et al.  THE CROWDING-OUT EFFECT OF GOVERNMENTAL TRANSFERS ON PRIVATE CHARITABLE CONTRIBUTIONS: CROSS-SECTION EVIDENCE , 1984, National Tax Journal.

[18]  Todd Sandler,et al.  EASY RIDERS, JOINT PRODUCTION, AND PUBLIC GOODS* , 1984 .

[19]  James B. McDonald,et al.  Some Generalized Functions for the Size Distribution of Income , 1984 .

[20]  Robert Sugden,et al.  Reciprocity: The Supply of Public Goods Through Voluntary Contributions , 1984 .

[21]  C. Clotfelter.  Federal Tax Policy and Charitable Giving: Front matter "Federal Tax Policy and Charitable Giving" , 1985 .

[22]  O. Stark.  Motivations to Remit: Evidence from Botswana , 1985, Journal of Political Economy.

[23]  Federal Tax Policy and Charitable Giving , 1985 .

[24]  Todd Sandler,et al.  The Theory of Externalities, Public Goods, and Club Goods , 1986 .

[25]  H. Varian,et al.  On the private provision of public goods , 1986 .

[26]  B. Douglas Bernheim,et al.  On the Voluntary and Involuntary Provision of Public Goods , 1986 .

[27]  C. Clotfelter.  Federal Tax Policy and Charitable Giving , 1985 .

[28]  T. Sandler,et al.  Joint Supply and the Finance of Charitable Activity , 1986 .

[29]  R. Roberts.  Financing Public Goods , 1987, Journal of Political Economy.

[30]  Federal Tax Policy and Charitable Giving , 1987 .

[31]  J. Andreoni.  Privately provided public goods in a large economy: The limits of altruism , 1988 .

[32]  J. Andreoni.  Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence , 1989, Journal of Political Economy.

[33]  Robert McClelland,et al.  Voluntary Donations and Public Expenditures in a Federalist System: Comment and Extension , 1989 .