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Modelling Charitable Donations: A Latent Class Panel Approach

Author

Listed:
  • sarah Brown

    (Department of Economics, The University of Sheffield)

  • Mark N Harris

    (Department of Econometrics and Business Statistics, Monash University, Australia)

  • Karl Taylor

    (Department of Economics, The University of Sheffield)

Abstract

We apply a latent class tobit framework to the analysis of charitable donations at the household level where the latent class aspect of the model splits households into two groups, which we subsequently interpret as "low" donators and "high" donators. Then the tobit part of the model explores the determinants of the amount donated by each household conditional on being in that class. We consider both total donations and also separately religious donations. Our findings, which are based on US panel data, suggest that price and labour income elasticities differ substantially across the two classes. The inverse price effect is most pronounced for the "low" donators group for both total and religious donations. The labour income elasticity switches direction of influence upon charitable donations across the two latent classes with a negative influence for the "high" donators group and a positive influence for the "low" donators group, for the case of total donations to charity, a pattern which is reversed in the case of solely religious donations.

Suggested Citation

  • sarah Brown & Mark N Harris & Karl Taylor, 2010. "Modelling Charitable Donations: A Latent Class Panel Approach," Working Papers 2010017, The University of Sheffield, Department of Economics, revised Sep 2010.
    • Handle: RePEc:shf:wpaper:2010017
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    References listed on IDEAS

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    1. Vij, Akshay & Walker, Joan L., 2014. "Preference endogeneity in discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 64(C), pages 90-105.

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    More about this item

    Keywords

    Charity; Donations; Latent Class; Panel Data; Tobit;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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