Does charitable gambling crowd out charitable donations? Using matching to analyze a policy reform
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The impact of charitable lotteries on charitable donations depends on the motives of charitable donations, and is thus more an empirical question. Utilizing the propensity score matching method to overcome sample selection bias, this study estimates the effect of lotto outlays on direct charitable donations based on Taiwan’s experience of introducing a lottery in 2002. We find that people’s lottery spending neither crowds out nor crowds in charitable donations after the control group for lottery players is matched by propensity scores. The evidence thus suggests that people are more concerned about how they make their donations.
KeywordsCharitable donation Charitable lottery Crowding-out Altruism Conspicuous giving Propensity score matching
JEL ClassificationC21 D12 D64 H31
The author thanks Juin-Jen Chang, Been-Lon Chen, Stacey Chen, Yi-Ting Chen, Tim Graciano, Kamhon Kan, Eric S. Lin, Abigail Payne, Clive Werdt, C. C. Yang, and conference participants at the 68th Annual Congress of the International Institute of Public Finance, the 86th Annual Western Economic Association International Conference in San Diego, and Academia Sinica for their valuable comments on earlier drafts of this paper. The author especially thanks an anonymous referee and the editor for insightful comments that have improved the paper considerably. The author also gratefully acknowledges financial support from the NSC of Taiwan through grant NSC98-2410-H-007-020-MY2.
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