14th journées Louis-André Gérard-Varet

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Secularization, tax policy and prosocial behavior
Benjamin Bittschi, Sarah Borgloh, Berthold U. Wigger

Last modified: 2015-05-11


Using German administrative income tax data we investigate economic consequences of
an increasingly secular society for prosocial behavior. For this purpose, we establish initially
a simple household model to formalize the relationship between religious giving in form of
the German church tax and other tax deductible donations. We test the model hypotheses
empirically and compare how income and the tax-price of giving differ as incentives to
give between individuals leaving church and church members. While we find evidence for
crowding in between religious giving and other donations for church members, we do not
observe such a relation for church leavers. Moreover, donation behavior of church-leavers is
much more responsive to tax incentives of charitable giving compared to church members.
Moreover, we find that non-donors have an increased probability of leaving church
compared to donors. We trace this results back to the fact that non-donor are not able to
compensate higher church taxes by reducing their donations.