We estimate the elasticity of charitable giving with respect to price and
income changes using a rich panel of income tax returns covering the period
2001 to 2006. Employing censored quantile regression and exploiting the panel
structure, the advantage of our analysis is twofold: First, we derive results
for different points in the underlying distribution of charitable giving and
allow for giving to be heterogeneous. Thus, we do not only estimate responses
of giving to prices and incomes but also where the incentives matter most.
Second, we disentangle long-run responses to persistent changes in price and
income from temporary reactions, consumption smoothing, or tax planning.
Indeed, our results suggest that price elasticity is heterogenous across the
distribution of donors and that the persistent price elasticity is close to
one in absolute value at the upper and lower tail of the distribution of
charitable giving
