CHARITABLE CONTRIBUTIONS 

AND INTERGENERATIONAL TRANSFERS*

by

Gerald Auten and David Joulfaian** 

U.S. Department of the Treasury 

OTA Paper 72 February 1996 

OTA Papers is an occasional series of reports on the research, models, and datasets 

developed to inform and improve Treasury’s tax policy analysis. The papers are works 

in progress and subject to revision. Views and opinions expressed are those of the 

authors and do not necessarily represent official Treasury positions or policy. OTA 

Papers are distributed in order to document OTA analytic methods and data and invite 

discussion and suggestions for revision and improvement. Comments are welcome and 

should be directed to the authors. 

Office of Tax Analysis

U.S. Department of the Treasury

Washington, DC 20220

gerald.auten@do.treas.gov

david.joulfaian@do.treas.gov

_____________ 

* Published in the Journal of Public Economics (1996) 55-68. 

** We thank Charles Clotfelter, Hamilton Lankford, Harvey Rosen, Gabriel Rudney, 

Eugene Steuerle, and two anonymous referees for useful suggestions. The views 

expressed are those of the authors and do not necessarily reflect those of the Department 

of the Treasury. 
Charitable Contributions and Intergenerational Transfers 

Abstract 

This paper investigates the effects of bequest taxes and the income of children on the 

lifetime charitable contributions of parents. Using matched income tax records for 

parents and children, the results show a positive elasticity of 0.6 for contributions with 

respect to the tax price of bequests. The paper also finds that the income of children 

affects the amount that parents contribute to charity. The results show a positive 

elasticity of up to 0.14 for contributions by parents with respect to the income of 

children, implying that when children are better off, parents are likely to increase 

charitable giving. 
1. Introduction 

Individuals contribute over $60 billion to charity annually.1 While such gifts 

compete directly with transfers to children, little is known about the effects of the 

circumstances of the children or the role of bequest taxes on lifetime giving. Given the 

alternatives to charitable contributions, a properly specified demand function for such 

contributions should include the price of bequests in addition to the price of the 

contribution itself [Boskin (1976)]. It should also include the income of children since 

parents' decisions may be affected by their children's well-being [Becker (1974)]. 

While intergenerational transfers and their motivation have attracted considerable 

interest in recent years, they have yet to be incorporated in studies of charitable giving. 

The current literature effectively assumes that consumption is the only substitute to 

giving. Altruism, however, is not necessarily limited to charitable institutions. As 

"charity begins at home," parents may evaluate giving in light of the circumstances of 

their children and the tax treatment of transfers to them. 

This paper evaluates the effects of income, estate and gift taxes, and the income 

of children on the lifetime charitable contributions of parents. We use a unique data set 

that matches the federal income tax returns of a sample of wealthy individuals with their 

estate tax returns and also with the income tax returns of their children. We model the 

determinants of charitable contributions as a function of the income tax price and the 

1

 See Internal Revenue Service (1993, p. 145). This amount is for individuals with itemized 

deductions only. 

1 
2 

attributes of the donors, including their disposable income, the income of their children, 

as well as the tax price of bequests. 

Section 2 of the paper provides a brief review of the literature on charitable 

contributions. In Section 3, a model of lifetime giving to charity is presented. Section 4 

describes the data sources and the construction of variables. Empirical results are 

reported in Section 5. These results show that both the income of children and the tax 

price of bequests affect parents' lifetime charitable contributions. Concluding comments 

are provided in Section 6. 

2. Previous Research on Charitable Contributions 

More than 30 studies have investigated the determinants of lifetime charitable 

giving. Various researchers have used cross-section samples of tax returns, panel 

samples of tax returns, surveys, and aggregated time series data to estimate price and 

income elasticities of giving. Clotfelter (1985) and Steinberg (1990) provide extensive 

reviews of this literature. 

While the studies are too numerous to review in detail, it is worthwhile to note 

the findings of some of the early studies that set the pattern for later ones. Feldstein and 

Clotfelter (1976) used the 1963 Federal Reserve Board Survey of Financial 

Characteristics of Consumers to estimate price and income elasticities. They found that 

the price elasticity of lifetime contributions ranged from -1.07 to -1.57 and the income 

elasticity ranged from 0.79 to 0.99. They also found a wealth elasticity of 0.095, 

identical to that in Steuerle (1987). In a similar study using income tax data for 1970 
3 

and 1962, Feldstein and Taylor (1976) found price elasticities of -1.09 and -1.28 and 

income elasticities of 0.76 and 0.70. 

In general, studies of lifetime contributions have used the log-linear functional 

form in which the coefficients represent constant price and income elasticities. The price 

of giving is defined as 1 minus the marginal tax rate where the tax rate is a first dollar 

tax rate assuming that contributions are initially zero. Most of the studies refine the 

price variable by adjusting for the possibility of contributing property that has 

appreciated in value and thereby also saving the capital gains tax. Income is generally 

measured as disposable income or income less the taxes that would have been paid in the 

absence of giving. These definitions make the price and income variables independent of 

the actual amounts of charitable gifts. 

Additional variables used varied among the studies, but generally included age, 

marital status, and family size (or number of dependents). Additional refinements in 

some of the studies included alternative functional forms [Clotfelter and Steuerle (1981), 

Lankford and Wyckoff (1990)], government spending variables to measure crowding-out 

effects [Kingma (1989), Schiff (1985)], volunteer effort [Brown and Lankford (1992), 

Menchik and Weisbrod (1987)], and tax evasion [Slemrod (1989)]. 

The empirical studies of charitable giving have generally examined lifetime 

contributions in isolation from intergenerational transfers. At the theoretical level, 

however, Boskin (1976) fully accounts for transfer taxes, and posits charitable 

contributions as a function of estate and gift taxes in addition to the traditional variables 

used in the literature. 
4

3. Theoretical Framework 

In a simple model of utility maximization, an individual's utility is determined by 

own consumption (C), the wealth or resources of child heirs (Wh), lifetime charitable 

contributions (CC), and charitable bequests (CB). The individual's lifetime preferences, 

with appropriate discounting, can be characterized by the following utility function, 

U ' U(C, CC, CB, Wh ) (1) 

where Wh, the heir's wealth or resources, is defined as the sum of own income, gifts (G) 

and bequests (B) from parent, or: 

Wh ' Yh % B % G (2) 

where Yh is the heir's disposable income. 

The individual faces a budget constraint which requires that the sum of 

consumption (C), charitable contributions and charitable bequests (CC and CB), and gifts 

(G) and bequests (B) to children not exceed the individual's after-tax income (Y) plus 

wealth (W), or: 

PC C % PCC CC % PCB CB % PB B % PG G # W % Y (3) 

where P denotes price. The individual selects the amounts of consumption and transfers 

to heirs and charity by maximizing (1) subject to (2) and (3). Solving for the first-order 
5

conditions, and invoking the implicit-function theorem, the following charitable 

contribution function can be obtained: 

CC ' f ( PCC , PCB , PB , PG , Y, W, Yh ) (4) 

Lifetime charitable contributions thus depend on the prices of such contributions, 

charitable bequests, and gifts and bequests to heirs. In addition, the income and wealth 

of the donor and the income of the heirs would also affect contributions. 

Given income tax rate, J, estate tax rate, e, and gift tax rate, g, and normalizing 

on the price of consumption, the price variables in (4), similar to those in Boskin (1976), 

are: 

PCC ' 1&J

PCB ' (1%i)(1%B)

&1

PB ' (1%i)[(1&e)(1%B)]

&1

PG ' 1%g 

where B is the expected appreciation rate on the transferred asset and i is the discount 

rate. 

The price of a deductible cash contribution is one minus the marginal income tax 

rate (J). The tax treatment of contributions of appreciated property, however, is more 

complex because such gifts allow avoidance of the capital gains tax on the accrued gain 

as well as a deduction for the value of the asset. A more detailed discussion of this 

treatment is provided in the next section. 
6 

Given the estate tax deduction, the price of a charitable bequest depends only on 

the appreciation rate (B) and the discount rate (i). In order to provide a lifetime gift to a 

child, the parent will have to pay the gift tax (g) in addition to the gift and therefore the 

price of a one dollar gift is 1 + g. The current cost of providing a real dollar of 

inheritance is affected by the estate tax rate (e), asset appreciation rate (B), and the 

discount rate (i). 

4. Data and Construction of Variables 

4.1 Data 

A special study by the Statistics of Income Division of the Internal Revenue 

Service matched 1981 U.S. federal income tax returns for 1982 decedents to the income 

tax returns of their children heirs. The decedents income tax records were further 

matched against their 1982 estate tax records. The combined income and estate tax data 

set contains information on income sources and deductible expenses reported on income 

tax records in 1981, as well as the size and composition of terminal wealth reported by 

their estates in 1982. Demographic information is available on age, marital status, and 

number of children. 

4.2 Tax Prices 

The price of lifetime charitable giving of cash is defined as one minus the 

marginal tax rate. For taxpayers with significant amounts of corporate stock or real 

estate other than principal residences, a further adjustment was made to capture the 
7

capital gains tax avoided on contributions of appreciated property. The price of 

contributions of appreciated property is 1 - Jo - Jc ("G/V), where Jo and Jc are the 

ordinary and capital gains tax rates, respectively, G is the accrued gain on the asset, 

V is the market value of the asset and " reflects a discounting factor for the expected 

holding period if the asset were not donated and the possibility that the asset might 

escape taxation entirely if the asset is held until death. In order to facilitate comparison 

to previous studies, "G/V was assumed to equal 0.5.2 For taxpayers with stock or real 

estate, the price of giving was a weighted average of the price of giving cash and the 

price of giving appreciated property with the weights determined by the average 

proportion of non-cash gifts by income class. Taxpayers were deemed to have 

significant amounts of appreciable property capable of being contributed if they either 

received $200 in dividends or rental income (loss) or reported at least $10,000 in 

corporate stock or real estate on the estate tax return. The minimum price is 0.4, or (1 

- 0.50 - 0.50 * 0.20), with an ordinary income tax rate of 0.50 and a capital gains tax 

rate of 0.20. 

In measuring the charitable bequest price, we assume that the transferred asset 

appreciates at the same rate as the discount rate. The resulting charitable bequest price is 

one. Estate and gift taxes on intergenerational transfers are combined under the federal 

unified transfer tax. Under this tax, inter-vivos gifts and testamentary bequests are 

subject to a unified tax rate schedule. More importantly, the tax liability is based on 

2

This value was first used by Feldstein and Clotfelter (1976) based on a maximum likelihood search 

procedure. Later studies of charitable contributions have generally used this value. 
8

cumulative transfers. Inter-vivos gifts, for instance, after an annual exemption of 

$10,000 ($3,000 prior to 1982) per donee, are added to gifts made in prior years in 

computing the gift tax, with an adjustment (credit) for previously paid taxes. At death, 

cumulative gifts are added to the estate in computing the estate tax liability and a credit 

is provided for previously paid gift taxes. The marginal "unified" tax rate is computed 

by adding $1,000 to the gross estate. The tax price of bequests to children is then 

defined as the inverse of one minus the computed tax rate.3 The maximum price in 

1982, the year of death, is 2.86, or 1/(1-0.65), and the minimum is one. Because gift 

and bequest taxes are part of a unified tax system, it is difficult to estimate their separate 

effects, and therefore the gift tax price is dropped.4 

4.3 Income and Wealth Measures 

Income of the contributors (decedents) is defined as Adjusted Gross Income 

(AGI) less the income tax liability computed in the absence of charitable contributions. 

The income of the children is the mean AGI of non-dependent (i.e., adult) children, also 

net of income taxes. Observations with incomplete matches for non-dependent children 

3

Capital gains taxes may affect the price of bequests to children if the asset held during life contained 

appreciated value. This is because these taxes would be paid if the parent were to sell the property to 

finance consumption. In this case the price of bequests becomes (1 - tc b)/(1 - e), where tc is the capital 

gains tax rate and b is the ratio of accrued capital gains to market value. The implications of this are 

addressed in the empirical section. Note that capital gains taxes may also affect the price of charitable 

bequests under this scenario. 

4

 Even if one were able to disentangle the gift tax rate from the estate tax rate, the tax prices are likely 

to be highly correlated even though the capital gains tax treatment of transferred property differs. Note, 

however, that the non-tax factors, such as control of a family business, can affect the implicit "prices" of 

gifts versus bequests. 
9 

were deleted from the sample in equations that include children's income. For 

observations where all children are dependents, children's income is assumed to be zero 

as they have no reported current income. Because the assumption of zero income does 

not reflect their expected income when they join the labor force, we also provide 

estimates with a sample that omits observations with dependent children to evaluate the 

robustness of our estimates. 

Wealth is defined as total assets less debts reported on estate tax returns. Several 

modifications are made to the reported value of total assets. The market value of farms 

and other small businesses eligible for special estate tax valuations is substituted for the 

estate tax value, and the share of jointly owned assets excluded from the estate is added 

back, along with lifetime charitable contributions reported on income tax returns. In 

addition, life insurance policy proceeds in the estate are excluded. When bequest taxes 

are considered, wealth is reduced by the amount of the transfer tax to be consistent with 

the construction of the income measure. This "disposable" wealth represents the 

maximum amount that can be inherited by the children. 

The means for selected variables are reported in Table 1. The first column in 

Table 1 shows 5,585 observations for primary taxpayers with mean contributions of 

$14,680, disposable income of $96,280, wealth of $2.7 million, and age of 76 years, 

with 28 percent over the age of 85. Over 90 percent of the sample report charitable 

contributions. About 45 percent of the individuals are married, and 43 percent 

widowed, with the remainder either single (never married) or divorced. The average 

income tax price is 0.4789. The second column of Table 1 reports mean values for the 
10

subsample of parents only. The results are similar to those in the first column. The 

average individual has about two children, and faces an average tax price of bequests of 

1.739. Column 3 presents the means with the sample restricted to observations where 

the income of adult or independent children is known. Column 4 omits observations 

where dependent children are present as their current income is zero and their future 

income is not known. Note that the means for contributions, income, wealth and tax 

prices in the restricted samples are quite similar to those in the full sample. 

5. Empirical Results 

The empirical results on the determinants of lifetime charitable contributions are 

reported in Table 2. While our main objective is to examine how the charitable giving 

of parents varies with the income of children and the tax price of bequests, we begin 

with the full sample in order to see whether our sample of older and wealthier 

individuals can replicate the results of earlier studies. Tobit estimates for the 

determinants of charitable contributions are shown for the entire sample in the first two 

columns, and for parents in columns (3) through (6). The variables are specified in 

natural logarithms. We add one dollar to the contribution and income variables to avoid 

taking the log of zero. 

Column (1) in Table 2 presents an equation similar to that estimated in many 

previous studies using income tax data.5 The results are consistent with the findings in 

5

The logarithmic specification is supported by the Box-Cox estimates in Lankford and Wykoff (1990), 

who find that the preferred model is very close to the logarithmic model. 
11

earlier studies which is reassuring given that our sample is more representative of older 

and wealthier individuals. The income tax price of giving is significant in the equation 

and implies a price elasticity of -1.27 evaluated at the mean. About 6 percent of this 

response is due to changes in the likelihood of giving and the rest is due to changes in 

the amount of giving of those who do give.6 The income elasticity of contributions is 

0.78. Giving is highest for married taxpayers. Those between the ages of 45 and 85 

have higher levels of contributions than those younger and older. The presence of 

dependent children is not statistically significant. 

Column (2) of table 2 adds the wealth variable to the equation in column (1). 

This reduces the absolute value of the price elasticity from -1.27 to -1.1, with the 

remaining coefficients essentially unchanged. This suggests that the omission of wealth 

from charitable giving regressions may lead to overestimates of the responsiveness of 

contributions to the price of giving. This should not be surprising since non-cash gifts 

account for approximately 30 percent of the contributions of donors in the sample.7 The 

elasticity of contributions with respect to wealth is about 0.4, significantly larger than 

that reported in Feldstein and Clotfelter (1976) and Steuerle (1987). One possible 

explanation of the higher wealth elasticity is that the measure of wealth used in this study 

is broader than the measures used in the earlier studies. 

6

See McDonald and Moffitt (1980) for discussion of this decomposition. 

7

In 1981, non-cash gifts accounted for 15 percent of the $29.8 billion in total charitable contributions, 

but over half of the contributions of taxpayers with at least $200,000 of Adjusted Gross Income [Internal 

Revenue Service (1983), p.54]. 
12

Focusing on parents only, column (3) of Table 2 replicate the estimates in the 

second column. The results for parents are generally similar to those obtained for the 

entire sample. The price elasticity of lifetime contributions is -1.15, the income 

elasticity is 0.78 and the wealth elasticity is about 0.45. In column (4), the price of 

charitable bequests is added. The price, income and wealth elasticities are slightly 

smaller in this equation at -1.12, 0.77 and 0.39, respectively. The coefficient on 

charitable bequests is statistically significant and positive with an estimate of about 0.6. 

This implies that through the effect on the price of bequests to children, higher estate tax 

rates are associated with higher lifetime contributions. Thus, the repeal of bequest taxes, 

which lowers the price of bequests and increases disposable wealth, would reduce 

lifetime charitable giving by about 12 percent. 

Column (5), which omits observations where the income of adult children is not 

known, adds the mean income of children and the bequest tax price to column (4) of 

Table 2.8 The estimates in column (5) show an income tax price elasticity of -1.07, 

income elasticity of 0.71, wealth elasticity of 0.53 and bequest price elasticity of 0.75. 

The elasticity of charitable giving with respect to the income of the children is positive 

and statistically significant, with an estimated coefficient of 0.08, indicating that more 

will be contributed to charity when the children are more well-off.9 These results imply 

8

We were not able to obtain income tax records for these heirs. Recall that income of children is 

assumed to be zero when all children are claimed as dependents on the tax return of the parent. 

9

We obtained the same 0.08 coefficient when we added child income to the equation estimated for the 

larger sample in column 4 and used dummy variables for non-matches. 
13

that giving increases by one percent when either the children's income increases by 12 

percent or the donor's income increases by 1.5 percent. 

Column (6) replicates the estimates in column (5), but omits observations where 

dependent children are present. For this smaller, and somewhat older group the 

estimated income tax price elasticity is -1.16. The income elasticity of 0.58 is somewhat 

lower than in the other equations and the wealth elasticity of 0.63 is somewhat higher. 

The effect of children's income on lifetime giving is larger with an elasticity of 0.14,10 

while that of the bequest price is lower with an elasticity of 0.65.11 The larger effect 

could be the result of the difference in the samples or the inability to properly measure 

the income of dependents in the column (5) specification. For this sample, charitable 

gifts are likely to increase by one percent when the children's income increases by 7 

percent or the parent's income increases by 1.7 percent. 

5.1 Charitable Bequests 

So far the paper has focused on the effects of children's income and bequest taxes 

on lifetime charitable giving. A case can be made for also evaluating the impact of the 

effects of these variables on charitable bequests at death. After all, if children's income 

influences the lifetime giving of parents, one might expect a similar effect on charitable 

10In an alternative specification that is not reported, children's income is measured by adjusting their 

income to age 45 assuming a 4 percent annual growth rate of income. The estimated coefficient for 

children's income was 0.161 with a standard error of 0.035. 

11 The coefficient on the price of bequests rises to 0.9 when capital gains taxes are combined with the 

estate tax. 
14

bequests. However, a full analysis of charitable bequests and the role of children's 

income would require the estate tax returns of both parents, and their income history 

over a number of years along with initial wealth endowments (inheritances). 

Unfortunately, our data on charitable bequests contains information only for one parent, 

unlike lifetime contributions which are generally reported jointly by both parents. We 

also do not observe the income or tax price of the surviving spouse or how that spouse 

will disburse the remainder of the estate. Nevertheless, with the caveat on data 

limitations in mind, we present estimates for charitable bequests in Table 2. The 

specification is similar to those previously used in studies of charitable bequests except 

that we add the income of the children.12 

The mean charitable bequest for parents with non-dependent children is 

$346,194, with about 25 percent of the observations reporting charitable bequests.13 

This compares to mean lifetime contributions of $18,546 with over 90 percent reporting 

such contributions. Column 7 of Table 2 shows the estimation results for charitable 

bequests. This model differs from the model for lifetime contributions in several 

respects. Relative to the lifetime definition, wealth is adjusted to account for resources 

available at death by excluding the surviving spouse's share of joint property, adding 

12We expanded on these specifications by including income and income tax price of lifetime giving. 

However, the estimated coefficients on these variables were statistically insignificant. Ideally, we would 

have preferred to replace the wealth variable with a measure of total lifetime income to examine how 

parents allocate charitable gifts between lifetime giving and bequests. 

13Since married decedents generally leave much of their wealth to their surviving spouse, the reported 

fraction of returns with charitable bequests may understate the relative frequency of giving by 

households. 
15

back life insurance proceeds, and excluding lifetime charitable contributions.14 The 

lifetime income and price variables are excluded from this model.15 The elasticity of 

bequests with respect to wealth is about 1.3, implying that charitable bequests increase 

more than proportionally with the size of the estate. The bequest tax price has a strong 

effect on charitable bequests with an elasticity of -2.5 evaluated at mean values. This 

result is within the range of estimates of previous studies.16 About 24 percent of the 

response is due to the change in probability of giving. While children's income is 

positively related to charitable bequests, the coefficient is not statistically significant. 

To shed light on the effect of children's income on charitable bequests, we 

further split the sample into married and widowed decedents. For married decedents, the 

Tobit equation (not reported) show an estimated coefficient for children's income of -

0.49 with standard error of 0.666. For widowed decedents, the estimated coefficient is 

0.173 with standard error of 0.332. Theses coefficients suggest that children's income 

has a small influence on the charitable bequests of parents, as both estimates are 

imprecisely measured. Again, this may be attributable to a lack of longitudinal data. It 

14The results are invariant to the inclusion or exclusion of lifetime charitable contributions in the 

definition of wealth. 

15We experimented with adding income and tax price of lifetime contributions to this equation. While 

the coefficients for both exhibited the theoretically correct sign, neither was statistically significant. Of 

course, this should not be surprising since both are measures for both parents, while charitable bequests 

are known only for the decedent parent. 

16For 1957-59 and 1969 estate tax returns, Boskin (1976) found charitable bequest tax price elasticities 

of -1.2 and -2.0, respectively. Using 1976 estate tax returns, Clotfelter (1985) found tax price elasticities 

of -1.67 and -2.79 depending on the definition of wealth. Joulfaian (1991) found a tax price elasticity of 

-3.0 for charitable bequests. 
16 

is also possible that testamentary and inter-vivos transfers are governed by different 

factors. 

6. Conclusions 

This paper extends the analysis of charitable contributions to take into account 

intergenerational transfers. Previous studies of charitable giving have generally ignored 

the effects of bequest taxes and the income of the heirs. Using income and estate tax 

records of a sample of affluent individuals, the paper investigates the effects of the tax 

price of bequests, wealth, and the income of children on charitable giving. One caveat is 

that since the sample reflects older and wealthier households, the results may not apply 

to the whole population. However, the estimated income and tax price elasticities are 

similar to those in previous studies of the whole population. 

The results suggest that lifetime charitable giving and intergenerational transfers 

are substitutes. Transfer taxes are found to affect lifetime contributions with an 

estimated elasticity of contributions with respect to the tax price of bequests of about 

0.6. The paper also finds that the income of children affects the amount that parents 

contribute to charity. The results show positive elasticity coefficients of up to 0.14 for 

contributions by parents with respect to the mean after-tax income of the children, 

compared to an elasticity of 0.6 or 0.7 with respect to parent's own income. The results 

imply that lifetime contributions would increase by one percent if children's income 

increases by 7 to 12 percent or parent's income increases by 1.5 to 1.7 percent. 
17 

While the results show that intergenerational transfers are an important 

consideration in lifetime charitable giving, their exclusion does not appear to have biased 

the findings on the income tax price of contributions in previous studies. However, the 

omission of wealth may have produced an upward bias in previous estimates of tax price 

and income elasticities. 
18 

References 

Becker, G.S. 1974, A Theory of Social Interactions, Journal of Political Economy 82, 

1063-1093. 

Boskin, M.J. 1976, Estate Taxation and Charitable Bequests, Journal of Public 

Economics 5, 27-56. 

Brown, E. and H. Lankford. 1992, Gifts of Money and Gifts of Time: Estimating the 

Effects of Tax Prices and Available Time, Journal of Public Economics 47, 321-341. 

Clotfelter, C.T. 1985, Federal Tax Policy and Charitable Giving (University of 

Chicago Press, Chicago). 

Clotfelter, C.T. and C.E. Steuerle. 1981, Charitable Contributions, in:

H. Aaron and J. Pechman, eds., How Taxes Affect Economic Behavior (Brookings

Institution, Washington, D.C.) 403-446.

Feldstein, M. 1975, The Income Tax and Charitable Contributions: Part I -Aggregate 

and Distributional Effects, National Tax Journal 28, 81-100. 

Feldstein, M. and C. Clotfelter. 1976, Tax Incentives and Charitable Contributions in 

the United States: A Microeconometric Analysis, Journal of Public Economics 5, 1-26. 

Feldstein, M. and A. Taylor. 1976, The Income Tax and Charitable Contributions, 

Econometrica 44, 1201-1221. 

Internal Revenue Service, 1993, SOI Bulletin 13, No. 2, (Washington, D.C.). 

Internal Revenue Service, 1983, Statistics of Income - 1981, Individual Income Tax 

Returns (U.S. Government Printing Office, Washington, D.C.). 

Joulfaian, D. 1991, Charitable Bequests and Estate Taxes, National Tax Journal 

44, 169-180. 

Kingma, B. 1989, An Accurate Measurement of the Crowd-out Effect, and Price Effect 

for Charitable Contributions, Journal of Political Economy 97, 1197-1207. 

Lankford, R.H. and J.H. Wyckoff. 1990, Modeling Charitable Giving Using a Box-Cox 

Standard Tobit Model, Review of Economics and Statistics, 460-470. 
19 

Menchik, P. and B. Weisbrod. 1987, Volunteer Labor Supply, Journal of Public 

Economics 32, 159-183. 

Schiff, J. 1985, Does Government Spending Crowd Out Charitable Contributions?, 

National Tax Journal 38, 535-546. 

Slemrod, J. 1989, Are Estimated Tax Elasticities Really Just Tax Evasion Elasticities? 

The Case of Charitable Contributions, Review of Economics and Statistics 71, 517-522. 

Steinberg, R. 1990, Taxes and Giving - New Findings, in The Nonprofit Sector in 

the United States and Abroad, Proceedings of the 1990 Spring Research Forum. 

Steuerle, E. 1987, Charitable Giving Patterns of the Wealthy, in T. Odendahl, ed., 

America's Wealthy and the Future of Foundations (The Foundation Center, New York). 
20

Table 1: Means of Selected Variables

Item 

Entire 

Sample 

Parents Sample 

All Sample 1 Sample 2 

Contributions 

ln Contributions 

14,680 

6.905 

16,775 

6.987 

17,181 

7.007 

18,546 

7.039 

Disposable AGI 

ln Disposable AGI 

96,280 

10.970 

94,599 

10.969 

95,071 

10.982 

96,533 

11.021 

Wealth 

Disposable Wealth 

ln Wealth 

ln Disposable Wealth 

2,731,653 

--

14.405 

--

2,757,206 

2,041,748 

14.410 

14.156 

2,841,275 

2,103,915 

14.410 

14.150 

2,878,642 

2,081,614 

14.420 

14.148 

Children 

Number of dependent children 

Number of others (independent) 

Dependents present (yes=1) 

Mean Disposable AGI 

ln Mean Disposable AGI 

--

--

--

--

--

--

2.250 

0.171 

2.079 

0.103 

--

--

2.129 

0.195 

1.934 

0.125 

50,865 

10.133 

2.146 

0.096 

2.050 

0.000 

57,082 

10.476 

Age 

Age under 45 

Age 45 to 54 

Age 55 to 64 

Age 65 to 74 

Age 75 to 84 

Age 85 or over 

75.99 

0.018 

0.050 

0.116 

0.212 

0.320 

0.284 

76.46 

0.011 

0.045 

0.108 

0.217 

0.336 

0.283 

76.170 

0.013 

0.053 

0.108 

0.206 

0.340 

0.280 

77.444 

0.000 

0.002 

0.032 

0.103 

0.352 

0.320 

Marital status 

Married 

Widowed 

Single 

Divorced/Separated 

0.454 

0.427 

0.071 

0.047 

0.412 

0.524 

0.004 

0.059 

0.406 

0.526 

0.006 

0.062 

0.389 

0.549 

0.005 

0.056 

Tax Prices (x100) 

Lifetime contribution 

Bequest 

ln Tax Prices 

Lifetime contribution 

Bequest 

47.89 

--

3.795 

--

47.72 

173.90 

3.791 

5.131 

47.89 

174.99 

3.794 

5.139 

46.80 

177.61 

3.773 

5.155 

Observations 

Observations with Contributions 

5,585 

5,023 

2,868 

2,607 

1,979 

1,803 

1,732 

1,582 

Parents Sample 1 is limited to observations where children's income is observed. The Sample 2 further 

omits observations where dependent children are present. 
21 

Table 2: Tobit Estimates for Charitable Gifts 

Lifetime Contributions Charitable 

Bequests Entire Sample Parents only 

Explanatory Variable (1) (2) (3) (4) (5) (6) (7) 

Constant 2.414 

(0.747) 

-3.285 

(1.137) 

-4.294 

(1.478) 

-6.565 

(1.817) 

-9.515 

(2.202) 

-9.561 

(2.458) 

-14.329 

(20.650) 

ln Income Tax Price -1.312 

(0.124) 

-1.174 

(0.125) 

-1.216 

(0.164) 

-1.162 

(0.166) 

-1.108 

(0.197) 

-1.212 

(0.216) 

--

-­

ln Income 0.780 

(0.036) 

0.748 

(0.034) 

0.783 

(0.047) 

0.773 

(0.047) 

0.709 

(0.053) 

0.590 

(0.062) 

--

-­

ln Net Worth --

--

0.396 

(0.060) 

0.467 

(0.077) 

0.396 

(0.084) 

0.535 

(0.109) 

0.641 

(0.126) 

3.945 

(0.826) 

Married 0.933 

(0.086) 

0.759 

(0.089) 

0.541 

(0.116) 

0.682 

(0.133) 

0.670 

(0.160) 

0.696 

(0.177) 

-1.188 

(1.063) 

Age under 45 -0.399 

(0.318) 

-0.284 

(0.316) 

-0.161 

(0.546) 

-0.146 

(0.546) 

0.267 

(0.649) 

--

--

--

--

Age 45 to 54 0.379 

(0.207) 

0.401 

(0.205) 

0.125 

(0.310) 

0.179 

(0.310) 

0.274 

(0.368) 

-0.269 

(0.635) 

-9.975 

(4.609) 

Age 55 to 64 0.474 

(0.147) 

0.482 

(0.146) 

0.507 

(0.199) 

0.560 

(0.200) 

0.447 

(0.241) 

0.388 

(0.272) 

-9.876 

(1.930) 

Age 65 to 74 0.514 

(0.117) 

0.497 

(0.116) 

0.469 

(0.151) 

0.500 

(0.151) 

0.457 

(0.183) 

0.418 

(0.193) 

-6.823 

(1.193) 

Age 75 to 84 0.519 

(0.102) 

0.518 

(0.101) 

0.504 

(0.132) 

0.514 

(0.132) 

0.331 

(0.158) 

0.309 

(0.163) 

-3.986 

(0.927) 

Dependent Children 

present (yes=1) 

0.065 

(0.190) 

0.065 

(0.188) 

0.078 

(0.211) 

0.082 

(0.211) 

0.250 

(0.246) 

--

--

--

-­

ln Child Income --

--

--

--

--

--

--

--

0.081 

(0.037) 

0.149 

(0.053) 

0.015 

(0.301) 

ln Bequest Tax Price --

--

--

--

--

--

0.606 

(0.282) 

0.750 

(0.351) 

0.667 

(0.399) 

-11.263 

(2.752) 

F 2.891 

(0.030) 

2.874 

(0.030) 

2.714 

(0.039) 

2.711 

(0.039) 

2.693 

(0.046) 

2.752 

(0.050) 

12.582 

(0.518) 

Likelihood -13177 -13155 -6638 -6635 -4576 -4054 -2,246 

Observations 5,585 5,585 2,868 2,868 1,979 1,732 1,732 

Standard errors are reported in parentheses.