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Econometric Issues in the Analysis of Charitable Giving

Author

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  • Robert McClelland

    (Bureau of Labor Statistics)

  • Mary F. Kokoski

    (Bureau of Labor Statistics)

Abstract

In this article, several econometric problems arising from estimating models of charitable contributions are examined. An instrumental variable technique proposed by Clotfelter is used to reduce the bias of the estimated price effect and compare it with other methods. Linear dependence between price and income are reduced by including state and local tax rates and show that the degree of collinear ity is low. By using demographic characteristics, current and permanent income and contributions to different organizations in the Consumer Expenditure Survey, the results are compared with other models, and bias caused by neglecting government expenditures is examined. These comparisons show that the dummy-intercept and the first-difference model omit important permanent effects and that omitting government welfare expenditures biases price elasticities, although the degree of bias may be small.

Suggested Citation

  • Robert McClelland & Mary F. Kokoski, 1994. "Econometric Issues in the Analysis of Charitable Giving," Public Finance Review, , vol. 22(4), pages 498-517, October.
    • Handle: RePEc:sae:pubfin:v:22:y:1994:i:4:p:498-517
    DOI: 10.1177/109114219402200406
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    References listed on IDEAS

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    1. Lankford, R Hamilton & Wyckoff, James H, 1991. "Modeling Charitable Giving Using a Box-Cox Standard Tobit Model," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 460-470, August.
    2. Reece, William S & Zieschang, Kimberly D, 1985. "Consistent Estimation of the Impact of Tax Deductibility on the Level of Charitable Contributions," Econometrica, Econometric Society, vol. 53(2), pages 271-293, March.
    3. McClelland, Robert, 1989. "Voluntary Donations and Public Expenditures in a Federalist System: Comment and Extension," American Economic Review, American Economic Association, vol. 79(5), pages 1291-1296, December.
    4. Gillingham, Robert & Greenlees, John S, 1987. "The Impact of Direct Taxes on the Cost of Living," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 775-796, August.
    5. Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486, December.
    6. Belsley, David A., 1988. "Conditioning in models with logs," Journal of Econometrics, Elsevier, vol. 38(1-2), pages 127-143.
    7. Steinberg, Richard S, 1987. "Voluntary Donations and Public Expenditures in a Federal System," American Economic Review, American Economic Association, vol. 77(1), pages 24-36, March.
    8. Charles T. Clotfelter, 1985. "Federal Tax Policy and Charitable Giving," NBER Books, National Bureau of Economic Research, Inc, number clot85-1, March.
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    Cited by:

    1. Gruber, Jonathan, 2004. "Pay or pray? The impact of charitable subsidies on religious attendance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2635-2655, December.
    2. Peter Backus & Nicky Grant, 2016. "Consistent Estimation of the Tax-Price Elasticity of Charitable Giving with Survey Data," Economics Discussion Paper Series 1606, Economics, The University of Manchester.
    3. Duquette, Nicolas J., 2016. "Do tax incentives affect charitable contributions? Evidence from public charities' reported revenues," Journal of Public Economics, Elsevier, vol. 137(C), pages 51-69.
    4. Barış K. Yörük, 2013. "The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1708-1721, December.
    5. Catherine Eckel, 2005. "Subsidizing Charitable Contributions: A Field Test Comparing Matching and Rebate Subsidies," Working Papers 2098, The Field Experiments Website.
    6. Ralph Bradley & Steven Holden & Robert Mcclelland, 2005. "A Robust Estimation Of The Effects Of Taxation On Charitable Contributions," Contemporary Economic Policy, Western Economic Association International, vol. 23(4), pages 545-554, October.
    7. Benediktson, Mathias Nylandsted, 2018. "Investigating the U-Shaped Charitable Giving Profile Using Register-Based Data," DaCHE discussion papers 2018:1, University of Southern Denmark, Dache - Danish Centre for Health Economics.
    8. Peter G. Backus & Nicky L. Grant, 2019. "How sensitive is the average taxpayer to changes in the tax-price of giving?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 317-356, April.
    9. Backus, Peter, 2010. "Is charity a homogeneous good?," The Warwick Economics Research Paper Series (TWERPS) 951, University of Warwick, Department of Economics.
    10. David H. Eaton & Martin I. Milkman, 2004. "An Empirical Examination of the Factors that Influence the Mix of Cash and Oncash giving to Charity," Public Finance Review, , vol. 32(6), pages 610-630, November.
    11. James E. Long, 2000. "Omitted-Variables Bias when Using State Tax Rates to Estimate the Tax Price Effect on Itemized Deductions," Public Finance Review, , vol. 28(2), pages 120-133, March.
    12. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Contributions in the Field: Evidence from a Non-Secular Charity," Monash Economics Working Papers archive-44, Monash University, Department of Economics.
    13. Arthur C. Brooks, 2007. "Income tax policy and charitable giving," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(3), pages 599-612.

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