Does One Charitable Contribution Come at the Expense of Another?

Reinstein, David

doi:10.2202/1935-1682.2487

Cited by 39 publications

(29 citation statements)

References 14 publications

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“…Therefore, in addition to the unobserved individual effects that are time-invariant, the estimated negative impact of charitable subsidies on religious participation cannot be explained by the existence of omitted variables that vary jointly by income level and year, jointly by state and year, and jointly by state and income level. 31 …”

Section: Robustness Checksmentioning

confidence: 99%

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The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data

Yörük

2013

The Review of Economics and Statistics

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In the United States, charitable contributions can be deducted from taxable income making the price of giving inversely related to the marginal tax rate. The existing literature documents that charitable giving is very responsive to tax subsidies, but often ignores the spillover effects of such policies. This paper investigates the spillover effects of charitable subsidies on religious participation using a newly available individual-level panel data. Understanding these spillover effects may be quite important, given the existing literature that links religiosity to several economically important social behaviors. The results show that religious giving and participation are complements. Increasing the price of religious giving decreases not only religious contributions but also religious attendance. The implied cross-price elasticity of religious participation with respect to the after-tax price of giving is −0.27. Furthermore, a 1% increase in the amount of religious contributions is associated with a 0.4% increase in religious attendance. These results are robust under several different specifications and highlight the positive externalities created by charitable subsidies. They also have important implications for testing the validity of existing economic models of religious participation and giving.

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Section: Robustness Checksmentioning

confidence: 99%

“…The last three columns of Table 3 document the effect of the amount of religious contributions 31 I also include all three interaction terms jointly to religious participation models. These models yield similar estimates.…”

Section: The Impact Of Religious Giving On Religious Attendancementioning

confidence: 99%

The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data

Yörük

2013

The Review of Economics and Statistics

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“…Footnote 4 continued a panel of tax-filer data and Yöruk (2010Yöruk ( , 2013, Reinstein (2011), Brown et al (2012) and Brown et al (2015) generally find price elasticities in excess, sometimes substantially so, of − 1 using the same survey panel data we use. In their working paper, Andreoni et al (1999) use a Gallop survey of household giving and find price elasticities ranging from − 1.73 to − 3.35, magnitudes that they note are 'consistent with the body of literature' (p. 11).…”

Section: Introductionmentioning

confidence: 99%

“…Despite finding evidence that these instruments satisfy the identification condition, they only explain a small variation in the price of giving, as most of the price variation comes from 7 Some of these studies do not exclude the endogenous itemizers (e.g., Brown and Lankford 1992;Bradley et al 2005;Yöruk 2010) meaning estimated price elasticities will suffer from both the known bias from endogenous itemizers and the bias outlined here from endogenous non-itemizers. Gruber (2004) and Reinstein (2011) impute itemization status, though such an approach can introduce nonclassical measurement error. In neither case, however, is the main aim of the study the consistent estimation of the price elasticity of giving.…”

Section: Introductionmentioning

confidence: 99%

How sensitive is the average taxpayer to changes in the tax-price of giving?

Backus

Grant

2018

Int Tax Public Finance

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There is a substantial literature estimating the responsiveness of charitable donations to tax incentives for giving in the USA. One approach estimates the price elasticity of giving based on tax return data of individuals who itemize their deductions, a group substantially wealthier than the average taxpayer. Another estimates the price elasticity for the average taxpayer based on general population survey data. Broadly, results from both arms of the literature present a counterintuitive conclusion: the price elasticity of donations of the average taxpayer is larger than that of the average, wealthier, itemizer. We provide theoretical and empirical evidence that this conclusion results from a heretofore unrecognized downward bias in the estimator of the price elasticity of giving when non-itemizers are included in the estimation sample (generally with survey data). An intuitive modification to the standard model used in the literature is shown to yield a consistent and more efficient estimator of the price elasticity for the average taxpayer under a testable restriction. Strong empirical support is found for this restriction, and we estimate a bias in the price elasticity around − 1, suggesting the existing literature significantly over-estimates (in absolute value) the price elasticity of giving. Our results provide evidence of an inelastic price elasticity for the average taxpayer, with a statistically significant and elastic price response found only for households in the top decile of income.

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“…We base our analysis on the 5% sample of the German Taxpayer To the best of our knowledge, Reinstein (2011) is the only author applying the FEPM in the context of charitable giving. He does, however, not distinguish between effects from different income sources.…”

Section: Datamentioning

confidence: 99%

On Tax Evasion, Entrepreneurial Generosity and Fungible Assets

2016

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. On tax evasion, entrepreneurial generosity and fungible assetsBenjamin Bittschi * (KIT Karlsruhe and ZEW Mannheim)Sarah BorglohMarch 2016 AbstractWe estimate the effects of income from various sources on charitable giving using administrative German income tax data. We demonstrate that charitable contributions are not uniformly affected by different income types. While business and capital income exhibit a positive effect, the remaining income sources do not influence charity on statistically significant levels. This exercise is not new and has been conducted for (at least) three different purposes: 1) Relying on the described results, a public finance researcher would state that business and capital income are more prone to tax evasion than the remaining income sources. 2) An entrepreneurship researcher would conclude that business owners are more generous than employees, and 3) a researcher testing the validity of the life cycle theory (or its behavioral counterpart) would refute the fungibility of income. In contrast, we argue that none of these approaches can answer the intended question if solicitation effects of fundraising or measurement error of the income sources are not taken into account. Applying a fixed effect poisson model, we demonstrate that under certain assumptions the results can have a meaningful interpretation.JEL Classification: D91, E21, H26, H41, L26

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Does One Charitable Contribution Come at the Expense of Another?

Cited by 39 publications

References 14 publications

The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data

The Impact of Charitable Subsidies on Religious Giving and Attendance: Evidence from Panel Data

How sensitive is the average taxpayer to changes in the tax-price of giving?

On Tax Evasion, Entrepreneurial Generosity and Fungible Assets

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