Tax Subsidies Can Improve Health - Pacific Standard

Tax Subsidies Can Improve Health

New research finds a clear link between better health and tax subsidies for charitable giving.
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Volunteers collect food donations. (Photo: Monkey Business Images/Shutterstock)

Volunteers collect food donations. (Photo: Monkey Business Images/Shutterstock)

There are proven ways to improve the health of Americans (and thereby lower health-care costs), such as encouraging better diets, regular check-ups, and less-sedentary lifestyles. But economist Baris Yörük has come up with a somewhat less obvious idea: Increase tax subsidies for charitable giving.

Doing so, he writes in the Journal of Economic Psychology, has “positive spillover effects on overall health status, and decreases the probability of suffering from several important health problems.”

“A growing body of literature documents that giving to others reduces stress and strengthens the immune system, which results in better health and longer life expectancy,” Yörük notes. These findings imply—and his study demonstrates—that incentives to give benefit not only the coffers of charities, but also the health of donors.

"A growing body of literature documents that giving to others reduces stress and strengthens the immune system, which results in better health and longer life expectancy."

Yörük, who is on the faculty of the University at Albany, State University of New York, analyzed the 2001, 2003, 2005, and 2007 waves of the Philanthropy Panel Study. As part of that survey, heads of household report both their level of charitable giving (on average, people gave 1.9 percent of their income), and their health (rating their overall condition on a five-point scale from excellent to poor). They also note whether they suffer from several specific medical problems.

Yörük analyzed these numbers, taking into account the way the tax code, and specifically the incentive for charitable giving, changed over that six-year period. He also factored in various demographic variables, including income, as well as state tax policies.

“The raw numbers suggest that the probability of reporting better health goes up as the tax subsidy for charitable giving increases,” Yörük writes. “(Among people) who do not give to charity, or do not itemize charitable contributions in their tax return ... 4.9 percent reported having poor health, and 20.5 percent reported having an excellent health status.

“In comparison, among those who are subject to the highest subsidy rate (35 percent or more), only 0.8 percent reported having poor health status, while 36.6 percent reported that their health was excellent.”

Further crunching of the numbers, which focused on people in each of the five health-condition categories, confirmed these findings.

“The results clearly show that charitable subsidies have a significant impact throughout the distribution of health status,” Yörük reports. “In particular, as a response to a tax subsidy for charitable giving, there is a sizable rise in the odds of reporting an excellent health status, and a sizable decline in the odds of reporting a poor health status.”

In addition, Yörük found “charitable subsidies are negatively associated with the probability of suffering from lung disease, emotional and psychological problems, and arthritis.” Other health problems were also negatively associated with these subsidies, including cancer and high blood pressure, but these associations did not reach the level of statistical significance.

It all suggests that tax breaks for charitable giving are a simple way for legislators to not just promote socially responsible behavior, but perhaps even reduce health-care costs. But of course, you don’t have to wait for Congress to act to enjoy the benefits Yörük documents. All you have to do is give.

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