Does philanthropy reduce inequality?
- 533 Downloads
Wealthy individuals often voluntarily provide public goods that the poor also consume. We show that, rather than reducing it, such philanthropy may aggravate absolute inequality in welfare achievement, while leaving the change in relative inequality ambiguous. Additionally, philanthropic preferences may increase the effectiveness of policies to redistribute income, instead of weakening them. Our results thus suggest that philanthropy and direct redistribution may often be better viewed as complements, rather than substitutes, in the context of inequality reduction. In so doing, they also bring into question the general normative case for large tax deductions for charitable contributions.
KeywordsCommunity Public goods Inequality Distribution Philanthropy
Unable to display preview. Download preview PDF.
- 5.Blumkin, T., Sadka, E.: On the desirability of taxing charitable contributions. CESifo Working Paper 1900 (2007b)Google Scholar
- 6.Boadway, R., Marchand, M.: The use of public expenditures for redistributive purposes. Oxf. Econ. Pap. 47, 45–59 (1995)Google Scholar
- 9.Chakravarty, S., Tyagarupananda, S.: The subgroup decomposable absolute indices of inequality. In: Chakravarty, S.R., Coondoo, D., Mukherjee, R. (eds.) Quantitative Economics: Theory and Practice. Allied, New Delhi (1998)Google Scholar
- 10.Cornes, R.: Measuring the distributional impact of public goods. In: Van de Walle, D., Nead, K. (eds.) Public Spending and the Poor: Theory and Evidence. Johns Hopkins University Press/World Bank, Washington (1996)Google Scholar
- 12.Cornes, R., Sandler, T.: The Theory of Externalities, Public Goods and Club Goods, 2nd edn. Cambridge University Press, Cambridge (1996)Google Scholar
- 14.D’Arcy, D.: Artful Dodgers. www.forbes.com/2002/07/03/0703hot.html (2002)
- 15.Dasgupta, I.: Why praise inequality? Public good provision, income distribution and social welfare. Discussion Paper 08/07, School of Economics, University of Nottingham (2008)Google Scholar
- 17.Dasgupta, I., Kanbur, R.: Bridging communal divides: separation, patronage, integration. In: Barrett, C. (ed.) The Social Economics of Poverty: On Identities, Groups, Communities and Networks. Routledge, London (2005a)Google Scholar
- 21.Hrywna, M.: Obama’s budget would cut charitable deduction. The NonProfit Times February 27; www.nptimes.com/09Feb/npt-022709-1.html (2009)
- 25.Leigh, G.: Small Matters of Life and Death. The Guardian, London (2006)Google Scholar
- 26.Scruton, R.: The Meaning of Conservatism, 3rd edn. Palgrave, Houndmills (2001)Google Scholar