Econometrica · 1985 · 107 citations · 17 references
Public AffairsEconomicsPublic FinanceEconometricsPublic EconomicsTaxationBehavioral Responses To TaxationCharitable DeductionCharitable GivingFiscal Impact AnalysisRevenue EstimationTax IncentivesCharitable Contribution DeductibilityCharitable DonationsConsumer Expenditure AnalysisEconometric Demand ModelsEconometric IdentificationIncome Tax Charitable DeductionSpurious CorrelationTax-deductibility Of Donations
When charitable contributions are tax deductible, the marginal price of giving falls below unity and rises in a stepwise fashion under progressive tax schedules, creating a spurious correlation that complicates demand estimation. The study aims to estimate a charitable contributions demand function that accounts for this econometric issue using 1972‑73 Consumer Expenditure Survey data. They address the spurious correlation by incorporating it into an econometric model and estimating the demand function with the CEX data. Comparing their estimates to other methods, they show how different tax policies affect charitable giving.
When charitable contributions are tax deductible, the marginal price of charitable giving in other consumption foregone per dollar of contributions is generally less than unity. Further, if the income tax schedule is a progressive step function, the marginal price of contributions is generally a rising step function of the level of contributions. The problem of estimating a contributions demand function for individuals is therefore complicated by the spurious correlation between the level of contributions and the observed marginal price. We take this econometric problem into account in estimating a contributions demand function using data from the 1972-73 Consumer Expenditure Survey. After comparing our results with those of estimation techniques used by other authors, we provide evidence on the impacts of alternative tax policies on charitable giving using our estimates of the model parameters.
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Estimation and Inference in Nonlinear Structural Models
Ernst R. Berndt, Bronwyn H. Hall, Robert E. Hall et al. · RePEc: Research Papers in Economics · 1974 · 2K citations
The Demand for Electricity: A Survey
Lester D. Taylor · The Bell Journal of Economics · 1975 · 711 citations