Periodic Reporting for period 2 - PARTICIPATE (CamPAign Finance, InfoRmaTIon and InfluenCe: A ComprehensIve APproAch Using Individual-Level Data and CompuTEr Science Tools)
Período documentado: 2022-08-01 hasta 2024-01-31
The goal of PARTICIPATE is to develop a comprehensive approach to the study of campaign finance, information and influence, using new individual-level data and investigating recent changes in participation behaviors. What are the motives behind small campaign contributions? Does tax policy affect political giving? Why are so few politicians from the working class and can this change? What is the ability of the media to induce citizens to make electoral decisions they would not make if reporting were unbiased? While there is evidence at the macro level on the flow of money in elections, news consumption, or the extent of charitable giving, relatively little is known at the micro level, e.g. on individual-level behaviours such as the motivations of small donors, the tax-price elasticity of political donations, or the exposure to competing information flows. The overall objective of PARTICIPATE is to help fill this gap.
During the first period covered by this reporting, PARTICIPATE has advanced the existing research by proposing a unified analysis of political contributions. First, together with L. Bouton, E. Dewitte and
V. Pons, I wrote an article entitled “Small Campaign Donors” in which we provide a groundbreaking assessment of the importance of small campaign donations.
Second, together with M. Guillot, in an article entitled “Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns”, we provided a combined study of charitable giving and political contributions investigating the impact of tax policy on donations.
Third, in a project called “The Far-Right Donation Gap” (with M. Hengel and Y. Huang), we document a widespread decline in the share of donors to charities in Western countries over the past decade, and show that this can be in part explained by a lower propensity to donate among far-right voters. To do so, we rely on three novel datasets. First, we first conduct a large-scale survey in France and show that far-right voters are significantly less likely to report a charitable donation than the rest of the population. Second, we use administrative tax data for the universe of French municipalities that we combined with electoral results. Third, we exploit unique geo-localized donation data from several charities and document similar patterns. All evidence points towards a drop in the propensity to donate driven by a shift in social norms that threatens general acceptance of the charitable sector.
Fourth, I prepared for the Annual Review of Economics a review article on “Political Inequality.”
V. Pons, I wrote an article entitled “Small Campaign Donors” in which we provide a groundbreaking assessment of the importance of small campaign donations.
Second, together with M. Guillot, in an article entitled “Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns”, we provided a combined study of charitable giving and political contributions investigating the impact of tax policy on donations.
Third, in a project called “The Far-Right Donation Gap” (with M. Hengel and Y. Huang), we document a widespread decline in the share of donors to charities in Western countries over the past decade, and show that this can be in part explained by a lower propensity to donate among far-right voters. To do so, we rely on three novel datasets. First, we first conduct a large-scale survey in France and show that far-right voters are significantly less likely to report a charitable donation than the rest of the population. Second, we use administrative tax data for the universe of French municipalities that we combined with electoral results. Third, we exploit unique geo-localized donation data from several charities and document similar patterns. All evidence points towards a drop in the propensity to donate driven by a shift in social norms that threatens general acceptance of the charitable sector.
Fourth, I prepared for the Annual Review of Economics a review article on “Political Inequality.”
The article “Small Campaign Donors” contributes to the large literature on campaign donations by studying the contributions of small donors and the differences with large donors’ behavior. The existing literature has mainly focused on the total aggregate resources available for political campaigns or on large political contributions. Small donors have been overlooked and existing work mostly relies on survey data. By contrast, this paper relies on administrative data, thereby addressing well- known limitations of self-reported data, and studies the effect of the alignment between donors and candidates’ sociodemographic characteristics on donations.
The article entitled “Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns”, we contribute to the long tradition of research analyzing philanthropic giving, and in particular estimating the tax-price elasticity of giving.
Our contribution is fourfold. First, while the focus of the existing literature – to the exception of Petrova et al. (2020) – is on charitable contributions, we also consider political donations that benefit from similar tax incentives but may be driven by different motivations. We contribute to this literature by looking at substitution effects within the same donors.
Second, while the focus of the existing literature has been on the income tax, our paper also exploits variations in the wealth tax and estimates the cross-price elasticity of giving. We are the first to study the extent to which wealth-tax deductions impact donations.
Third, while the existing research mostly uses survey data, sample of tax payers or focuses on the top of the income distribution when using tax returns, we rely on an exhaustive administrative panel dataset and estimate the elasticities at different levels of the distribution. Almunia et al. (2020) similarly use administrative tax return data (from the UK). But while they only consider the income tax and focus on charitable giving, we study both income and wealth tax and investigate whether there are substitution effects between charitable and political donations.
Finally, this paper also contributes to the literature on the political economy of charitable giving by estimating whether charitable giving and political donations act as substitutes or complements. Furthermore, we provide novel evidence on political motivations driving donations by donors at the very top of the income and/or wealth distribution who tend to be absent from surveys while they drive a large share of the observed donations.
Third, the paper entitled “The Far-Right Donation Gap” contributes to the nascent literature that highlights the role of political preferences in the decision to give money to a non-profit organization. While there is a large literature investigating the determinants of charitable donations, the focus has mostly been on the overall rise of the charitable sector, with little attention to the fact that the share of donors among citizens has actually been decreasing in recent years.
Additional expected results are:
As part of Project 1b, together with A. Denis, M. Guillot and C. Urvoy, we plan to study the motivations behind firms’ charitable giving behavior, and in particular to identify the extent to which it may be used as means to influence the political environment. We plan to rely on a novel dataset of tax return for all French firms from 2000 onwards. We aim at estimating the cross-price elasticity of charitable and political spending (as measured by lobbying activities) at the firm level, and determine whether these two types of giving act as substitutes or complements.
Together with M. Hengel and Y. Huang, we plan to investigate whether people are informed about existing tax incentives, and to identify the incentive structures that are more efficient at raising charitable and political donations, depending on donors’ characteristics. While this was not planned in the original project submitted to the ERC, I took advantage of the French electoral context – with the 2012 presidential and legislative elections – and of the existing “French Electoral Survey” to perform a survey experiment.
The remaining additional expected results are mainly with respect to Projects 2 and 3 that are still at early stages.
The article entitled “Is Charitable Giving Political? Evidence from Wealth and Income Tax Returns”, we contribute to the long tradition of research analyzing philanthropic giving, and in particular estimating the tax-price elasticity of giving.
Our contribution is fourfold. First, while the focus of the existing literature – to the exception of Petrova et al. (2020) – is on charitable contributions, we also consider political donations that benefit from similar tax incentives but may be driven by different motivations. We contribute to this literature by looking at substitution effects within the same donors.
Second, while the focus of the existing literature has been on the income tax, our paper also exploits variations in the wealth tax and estimates the cross-price elasticity of giving. We are the first to study the extent to which wealth-tax deductions impact donations.
Third, while the existing research mostly uses survey data, sample of tax payers or focuses on the top of the income distribution when using tax returns, we rely on an exhaustive administrative panel dataset and estimate the elasticities at different levels of the distribution. Almunia et al. (2020) similarly use administrative tax return data (from the UK). But while they only consider the income tax and focus on charitable giving, we study both income and wealth tax and investigate whether there are substitution effects between charitable and political donations.
Finally, this paper also contributes to the literature on the political economy of charitable giving by estimating whether charitable giving and political donations act as substitutes or complements. Furthermore, we provide novel evidence on political motivations driving donations by donors at the very top of the income and/or wealth distribution who tend to be absent from surveys while they drive a large share of the observed donations.
Third, the paper entitled “The Far-Right Donation Gap” contributes to the nascent literature that highlights the role of political preferences in the decision to give money to a non-profit organization. While there is a large literature investigating the determinants of charitable donations, the focus has mostly been on the overall rise of the charitable sector, with little attention to the fact that the share of donors among citizens has actually been decreasing in recent years.
Additional expected results are:
As part of Project 1b, together with A. Denis, M. Guillot and C. Urvoy, we plan to study the motivations behind firms’ charitable giving behavior, and in particular to identify the extent to which it may be used as means to influence the political environment. We plan to rely on a novel dataset of tax return for all French firms from 2000 onwards. We aim at estimating the cross-price elasticity of charitable and political spending (as measured by lobbying activities) at the firm level, and determine whether these two types of giving act as substitutes or complements.
Together with M. Hengel and Y. Huang, we plan to investigate whether people are informed about existing tax incentives, and to identify the incentive structures that are more efficient at raising charitable and political donations, depending on donors’ characteristics. While this was not planned in the original project submitted to the ERC, I took advantage of the French electoral context – with the 2012 presidential and legislative elections – and of the existing “French Electoral Survey” to perform a survey experiment.
The remaining additional expected results are mainly with respect to Projects 2 and 3 that are still at early stages.