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ERIC Number: EJ1010260
Record Type: Journal
Publication Date: 2013
Pages: 18
Abstractor: As Provided
Reference Count: 40
ISSN: ISSN-0276-8739
Are Charitable Giving and Religious Attendance Complements or Substitutes? The Role of Measurement Error
Kim, Matthew
Journal of Policy Analysis and Management, v32 n2 p373-390 Spr 2013
Government policies sometimes cause unintended consequences for other potentially desirable behaviors. One such policy is the charitable tax deduction, which encourages charitable giving by allowing individuals to deduct giving from taxable income. Whether charitable giving and other desirable behaviors are complements or substitutes affect the welfare benefit of the deduction--complements increase the benefit, while substitutes decrease the benefit. This paper focuses on the effect of the deduction on one behavior in particular: religious attendance. Using data from the Independent Sector Survey of Giving and Volunteering, I estimate a tax price elasticity for religious attendance of -0.4, which implies that charitable giving and religious attendance are complements. I resolve the difference between my estimate and a recent estimate by W. S. Gruber (2004) that implies charitable giving and religious attendance are substitutes. While Gruber imputes itemization status, an important factor in calculating tax incentives, I use survey-reported itemization status. This imputation creates a large amount of non-classical measurement error. I show that the measurement error is responsible for the disparate results: If I also impute itemization status, I obtain similar results as Gruber. (Contains 5 tables, 29 footnotes, and 2 figures.)
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Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A