Periodic Reporting for period 2 - PARTICIPATE (CamPAign Finance, InfoRmaTIon and InfluenCe: A ComprehensIve APproAch Using Individual-Level Data and CompuTEr Science Tools)
Période du rapport: 2022-08-01 au 2024-01-31
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 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.