Optimal Tithing

May 11, 2009 | 28 comments
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Suppose that we had a base 8 system instead of base 10, perhaps because, in this hypothetical world, we had 8 fingers rather than 10. Would we pay 1/8 our increase, or do you think it would still be one tenth?

Or, to reverse causality, what are the chances we have ten fingers so that we’d develop a base 10 system that would make it easier to count out our tithing?

Now suppose tithing were 12.5%, a 25% increase. What fraction of current tithe payers would stop paying? This would be the “price elasticity of tithing”. What about if tithing were 20%? What about 8%? From a typical economic framework, one would say that God decided the fraction tithing we pay based on maximizing some outcome he desired — presumably salvation– and likely made it what it is because it optimally balanced some societal average of our willingness to sacrifice and the benefits from that sacrifice.

Bonus question:

If a society’s income went up by 20%, would more people pay a full tithe, or fewer? The change is called the “income elasticity of tithing”. If full tithe paying rises, than tithing would be what is called a “luxury good” — you spend a higher fraction on it as income rises.

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28 Responses to Optimal Tithing

  1. Adam Greenwood on May 11, 2009 at 2:51 pm

    One is at a loss.

  2. Rob Perkins on May 11, 2009 at 2:58 pm

    “The [Tithing] is made for man, not man for the [Tithing]”

    Hence, base-10.

  3. Gilgamesh on May 11, 2009 at 2:58 pm

    I honestly don’t think it would make much of a difference. People pay tithing out of faithfulness, not expendable income.

  4. iguacufalls on May 11, 2009 at 3:08 pm

    Blue…..no. Green. AAAAAAAHHH!

  5. Last Lemming on May 11, 2009 at 4:16 pm

    It’s just a budgeting exercise. If the Church needs more than tithing will cover, they simply create a new fund and solicit donations (e.g. Perpetual Education). If they need less, then they abolish a fund and cover the associate service with tithing funds (e.g. ward budgets). If tithing were 12.5 percent, they could simply earmark 2.5 percent to local units for assistance to the poor and abolish fast offerings.

  6. Jacob J on May 11, 2009 at 5:19 pm

    See, this is why I will read anything Frank puts up. Yes, I think if we had a base 8 system we would pay 1/8 our increase because otherwise the object lesson in the bishop’s office during tithing settlement would be too hard to execute. Can you imagine trying to have each kid give back 1/10 of the eight m&m’s they were given? It would be pandemonium.

  7. gst on May 11, 2009 at 5:33 pm

    I’m just a band saw accident away from an effective 2% raise!

  8. The other Bro Jones on May 11, 2009 at 6:00 pm

    Comment #7 wins!
    but #4 was close

  9. Starfoxy on May 11, 2009 at 6:37 pm

    My husband and I have a friend who was trying to talk us into chopping off our then unborn baby’s pinky fingers to see if he would have an easier time counting in hex.
    While he was obviously kidding, sometimes I think it’s a good thing he doesn’t have kids.

  10. Matt W. on May 11, 2009 at 9:24 pm

    This is a fascinating question. Is Tithing considered a luxury good? I would guess the answer is that to a certain percentage it is, and to another percentage it is not. Maybe like medicine? A certain percent of the population stops buying medicine when times are tough, and another portion doesn’t..

  11. Phouchg on May 11, 2009 at 9:32 pm

    What if everything was binary? After all there are 10 types of people in the world: those who understand binary and those who don’t.

  12. Mark D. on May 12, 2009 at 12:39 am

    I would say there is no question that 10% is the optimal (or at least maximum revenue raising) tithing requirement in a base ten system, and that for any base from n=7 to n=14 or so, 1/n would be the optimal tithing requirement for that base.

    Other reasonable figures would likely be in the form of 1/(m*n) and m/n where n is the base and n is a small integer, preferably two. Anything less than 1/14 is probably too low and over 1/7 is probably too high, i.e. too many people either wouldn’t pay their tithing or significantly less tithing would be collected.

    I have never really wondered about changing the tithing rate, but I have wondered what faithful Christians and Jews did during the French Revolutionary period when they had ten day weeks. Wouldn’t having the sabbath only one out of ten days be problematic? Is one day out of seven the optimal number of days for sabbath day worship?

  13. Peter LLC on May 12, 2009 at 1:29 am

    Y’all are looking beyond the mark. People pay tithing when it’s tax deductible.

  14. Mark D. on May 12, 2009 at 1:50 am

    For a significant majority, the tax deduction due to tithing or other charitable contributions is minimal to non-existent (due to the standard deduction and/or low tax bracket).

    IMO, the country would be a lot better off (as a whole) without these funny tax deductions. I don’t see why gold plated private universities deserve preferred tax treatment to random acts of charity. The Church definitely doesn’t think so though.

  15. Rob on May 12, 2009 at 5:31 am

    Is BYU a “gold-plated private university?” Is it supported by any of our 10 percent? Are our children receiving subsidized educations?

  16. Kent Larsen on May 12, 2009 at 5:32 am

    I have to wonder if it would be possible to test any of these questions. I think the Church might be able to get a handle on the last question, the income elasticity of tithing, by comparing economic data to tithing receipts for a given area.

    I have to wonder, however, about the experimental difficulties that might arise trying to gather data to calculate the price elasticity of tithing. Would you take a number of economically similar wards or stakes and give them different tithing rates? Would you need to give them those rates long-term, so that they could mentally adjust to the new rates? Would you need different versions of the scriptures or Conference talks for each experimental area so that the different rate would be taught correctly?

    I believe that the Church did test one alternative rate, 100%, when it experimented with the United Order in the mid and late 19th century. Unfortunately, I think we would need few more data points at least to make any calculations about the price elasticity of tithing.

    One final thought: given the rhetoric in General Conference and elsewhere about the role of tithing, I think “income elasticity of tithing” might suggest something about another metric, one that is probably more important but is essentially unmeasurable: the faith elasticity of tithing.

  17. Peter LLC on May 12, 2009 at 6:25 am

    I suspect you are right, Mark D., that the payment of tithing does not boil down to a consideration of tax laws for the average member.

    However, I do wonder about the effect on tithing in countries with more restrictive policies than the US on the type and amount of charitable donations that are deductible. Where I live at least, the government is explicitly concerned about the possibility of tax incentives being exploited for tax evasion purposes and thus limits who can receive how much and still qualify as a deduction (starting this year one can deduct up to 200 euros donated to churches; previously the limit was 100).

    Rates of giving in general are lower outside the US, and I wonder if one would find similar trends among tithe payers or if they manage to buck the trend. I kind of doubt it though since the church subsidizes its units in some (many? most?) other countries, including in wealthy ones with a relatively large number of members (the UK, for example).

  18. Mark B. on May 12, 2009 at 7:21 am

    Is BYU a “gold-plated private university?” Is it supported by any of our 10 percent? Are our children receiving subsidized educations?

    In order:

    Yes.

    Yes.

    Only if they go there. Otherwise, you’re subsidizing someone else’s kids’ college educations.

  19. Frank McIntyre on May 12, 2009 at 8:56 am

    Kent,

    There was a paper a decade ago about whether or not people’s definitions of what counted for tithing varied based on how likely they were to get that kind of income — basically looking to see if people had self serving beliefs. They found no correlation.

    For the income elasticity of tithing, you could do as you suggest, but your answer would be biased up to the extent that paying tithing raised income.

    As for the price elasticity of tithing, I think you are right that we’re out of luck on that one, short of revelation. I guess we know that 100% was more than people were up for — although I suppose consecration wasn’t really the same as 100% tithing, as you got stuff back to work with.

    I imagine the crucial “faith elasticity” is completely out of our reach in mortality. Of course, outside of idle curiosity the main reason to know these numbers would be for some kind of policy intervention, and God knows all the numbers and already figured out how to work it, so…

  20. John Buffington on May 12, 2009 at 10:04 am

    Gilgamesh (#3)

    Not sure I would be so bold as to make this assertion

    D&C 119 hints that consideration can be given to surplus.

    I am not going to get into a debate on relative merits, but I know people who miscellaneously tithe on

    Change in Wealth
    Retained Earnings
    Revenue
    Net Income
    EBITDA
    Free Cash Flow
    etc, etc

    The point being that for some, it IS about giving of your surplus or expendable wealth/income, which can ALSO be a revealed indication of their faithfulness. Paying tithing is a divine principle; the economics of it is pretty much left up to us

  21. Mark D. on May 12, 2009 at 11:03 am

    Is BYU a “gold-plated private university?” Is it supported by any of our 10 percent? Are our children receiving subsidized educations?

    University level education isn’t cheap. The Church, for example, spends approximately $300 million / year of tithing funds on BYU. That is about $10,000 per student per year. (By way of comparison, the University of Utah receives approximately $400 million / year in state appropriations, about $14,000 per student per year).

    I am not saying that either of these institutions as a whole aren’t worthy charitable causes. I am saying that officially government certified charitable causes are not necessarily *more* worthy than the private charitable acts of individuals, and that much of the activity of private universities in particular is a case in point. BYU has a $30 million/year athletic budget for example. I don’t see why the BYU football program should be preferred over helping a family member pay his medical bills for example.

  22. Kevin Mumford on May 13, 2009 at 2:07 pm

    Frank,

    As #14 pointed out, the tax code creates some variation in the effective tithing rate. This variation may enable identification of the price elasticity of tithing. Families with the same income level may have different effective tithing rates due to differences in their expenditure on itemized deductions. You could even control for total amount of debt and have remaining variation in effective tithing rate as not all loan interest is deductible.

    The problem here is a lack of individual data. A revelation which assigned a random tithing rate to each member would be a better source of variation, but you would still need the church to give you individual tithing records.

  23. Frank McIntyre on May 13, 2009 at 3:41 pm

    Kevin,

    Yeah, but then I would have to be one of those guys who goes hunting through the tax code in order to use small changes to identify elasiticities. You don’t know anybody like that, do you?

  24. Cameron on May 14, 2009 at 2:51 am

    I’m grateful I don’t think of stuff like this, although it is pretty amusing.

  25. Cameron on May 14, 2009 at 2:54 am

    Sorry for the double post, but as soon to graduate BYU student, I would like to thank you faithful tithe payers for subsidizing my education. I am grateful for it and endeavor to serve faithfully in the church and support my family with my BFA in Industrial Design. Church leaders remind us often here at the Y that we have a subsidized education, and I’m glad they do.

  26. Jerry on May 15, 2009 at 12:20 pm

    #21 30 million for football – That is what percentage of the direct revenue of the program? (Answer=less than half if what USA Today has is correct) And if you consider all the other donations that come from people after watching the football team have a good season and then donating Football is big money.

    If education means anything to the Church they need to step and fund it. I personally am glad they have.

  27. Sandy Viewer on May 17, 2009 at 2:51 pm

    I aspire to the day that I can pay 8 digits in tithing on a regular basis, but I think that generally the more a person makes the harder it is to pay tithing. To write a big check can be pretty hard.

    #8 is premature, re: #11, et. al.

    If the economy turns much worse, we may have to dip into the Rhodes gold…..

  28. Anne on May 18, 2009 at 3:40 am

    I live in Canada and we live off of 35% of our income. I love tithing. I hate taxes. No gives back like the Lord. Okay, the gov does give back, just not to us.

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