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Correlated Random Effects Quantile Estimation of the Tax-Price Elasticity of Charitable Donations

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  • Nicky Lee Grant

    (University of Manchester)

Abstract

This paper provides quantile estimates of the tax-price elasticity of charitable donations controlling for unobserved heterogeneity. Utilising the Correlated Random Effects Quantile estimator of Bache, Dahl & Kristensen (2013) it is found that the size of the price elasticity is decreasing in the size of donation with very large donors being largely unresponsive to tax incentives for giving. We provide evidence that cross sectional quantiles estimates of the price elasticity not accounting for unobserved heterogeneity suffer a substantial downward bias for those with small to mid-level donations.

Suggested Citation

  • Nicky Lee Grant, 2016. "Correlated Random Effects Quantile Estimation of the Tax-Price Elasticity of Charitable Donations," Economics Bulletin, AccessEcon, vol. 36(3), pages 1729-1736.
    • Handle: RePEc:ebl:ecbull:eb-16-00355
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P169.pdf
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    References listed on IDEAS

    as
    1. Stefan Bache & Christian Dahl & Johannes Kristensen, 2013. "Headlights on tobacco road to low birthweight outcomes," Empirical Economics, Springer, vol. 44(3), pages 1593-1633, June.
    2. Abrevaya, Jason & Dahl, Christian M, 2008. "The Effects of Birth Inputs on Birthweight," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 379-397.
    3. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    4. Hsin-Yi Lin & Kuang-Ta Lo, 2012. "Tax Incentives and Charitable Contributions: the Evidence from Censored Quantile Regression," Pacific Economic Review, Wiley Blackwell, vol. 17(4), pages 535-558, October.
    5. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    6. 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.
    7. Gabrielle Fack & Camille Landais, 2010. "Are Tax Incentives for Charitable Giving Efficient? Evidence from France," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 117-141, May.
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    Cited by:

    1. Samiul Haque, 2022. "US federal farm payments and farm size: Quantile estimation on panel data," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 139-154, February.

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    More about this item

    Keywords

    Price Elasticity; Charitable Giving; Quantile Regression; Correlated Random Effects.;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H0 - Public Economics - - General

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