Impure Impact Giving: Theory and Evidence

The paper presents a new model of charitable giving where individuals regard out-of-pocket donations and the matches they induce as different. The paper shows that match-price elasticities combine conventional price effects with the strength of warm-glow, so that match-price elasticity alone is insufficient to characterize preferences for giving. Match- and rebate-price elasticities will typically be different, but together they lead to tests of underlying giving preferences. It estimates, for the first time, a match-price elasticity together with a real-world tax-based rebate elasticity in a non-laboratory high-stakes setting. The estimates reject extant models of giving, but are consistent with the new theory.