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Charitable giving and its persistent and transitory reactions to changes in tax incentives: Evidence from the German taxpayer panel

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  • Bönke, Timm
  • Werdt, Clive

Abstract

We estimate the elasticity of charitable giving with respect to price and income changes using a rich panel of income tax returns covering the period 2001 to 2006. Employing censored quantile regression and exploiting the panel structure, the advantage of our analysis is twofold: First, we derive results for different points in the underlying distribution of charitable giving and allow for giving to be heterogeneous. Thus, we do not only estimate responses of giving to prices and incomes but also where the incentives matter most. Second, we disentangle long-run responses to persistent changes in price and income from temporary reactions, consumption smoothing, or tax planning. Indeed, our results suggest that price elasticity is heterogenous across the distribution of donors and that the persistent price elasticity is close to one in absolute value at the upper and lower tail of the distribution of charitable giving.

Suggested Citation

  • Bönke, Timm & Werdt, Clive, 2015. "Charitable giving and its persistent and transitory reactions to changes in tax incentives: Evidence from the German taxpayer panel," Discussion Papers 2015/2, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:20152
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    References listed on IDEAS

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    Cited by:

    1. Jonathan Meer & Benjamin A. Priday, 2020. "Tax Prices and Charitable Giving: Projected Changes in Donations under the 2017 Tax Cuts and Jobs Act," Tax Policy and the Economy, University of Chicago Press, vol. 34(1), pages 113-138.
    2. Jonathan Meer & Benjamin A. Priday, 2019. "Tax Prices and Charitable Giving: Projected Changes in Donations Under the 2017 TCJA," NBER Working Papers 26452, National Bureau of Economic Research, Inc.
    3. Adena, Maja, 2021. "Tax-price elasticity of charitable donations – evidence from the German taxpayer panel," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 219-235.

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    More about this item

    Keywords

    charitable giving; price and income elasticity; censored quantile regression; taxpayer panel; administrative data; school performance;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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