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How Does Charitable Giving Respond to Incentives and Income? New Estimates from Panel Data

Jon Bakija () and Bradley Heim ()

No 2008-01, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: We estimate the elasticity of charitable giving with respect to persistent and transitory price and income changes using a 1979-2006 panel of tax returns. Our estimation procedure allows for anticipation of and gradual adjustment to tax changes, controls for various potential sources of omitted variable bias via fixed effects and income-class specific year dummies, and allows for a flexible non-linear relationship between income and charitable giving. Our most convincing estimates are identified by differences in the time-paths of tax incentives across states, and suggest a persistent price elasticity in excess of one in absolute value. Classification-JEL: H24, H31, D12

Keywords: charitable donations; incentive effects of taxation (search for similar items in EconPapers)
Pages: 46 pages
Date: 2008-07, Revised 2011-06
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Published in National Tax Journal, June 2011, 64 (2, Part 2), 615-650

Downloads: (external link)
https://web.williams.edu/Economics/wp/BakijaHeimCharity.pdf Full text, revised final version June 2011 (application/pdf)

Related works:
Journal Article: How Does Charitable Giving Respond to Incentives and Income? New Estimates From Panel Data (2011) Downloads
Chapter: How Does Charitable Giving Respond to Incentives and Income? New Estimates from Panel Data (2008)
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