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WHAT’S THE GOOD IN GIVING? A (SMALL) CONTRIBUTION TO THE ECONOMICS OF CHARITY

By alleviating poverty alongside public good provision, a charity might induce more donations than the standard Nash equilibrium model of voluntary public good provision predicts without appealing to phenomena like ”warm glow” or prestige. If both rich and poor donate when donations finance the public good alone, poverty alleviation is not optimal. If the rich alone donate, it might or might not be optimal for part of donations to go to alleviating poverty. If donations go partly to alleviating poverty, increasing the portion devoted to this end can result in greater overall giving, although public good provision might decline.