A large literature in public economics seeks to answer whether government activity crowds out charitable donations, but the empirical evidence is mixed. To resolve this inconsistency, we consider that people base their donation decisions not only on government spending per se, but also on their...

A large literature in public economics seeks to answer whether government activity crowds out charitable donations. The empirical evidence is mixed, however, and prior estimates range from large crowding out effects to small crowding in effects. To resolve this inconsistency, we consider that...