NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Identification in Tax-Price Regression Models: The Case of Charitable Giving

Daniel R. Feenberg

NBER Working Paper No. 988 (Also Reprint No. r0998)
Issued in September 1982
NBER Program(s):   PE

In this paper we use an instrumental variable estimator to exploit sources of independent variation, which allows unbiased estimation of the tax-price elasticity under more general conditions. The estimator is applied to the demand for charitable giving. A charitable giving equation is an appropriate test for this procedure because it represents the purest case of a tax-price coefficient. That is, taxes are the sole source of variance in the price. The deduction is also an important policy issue. In 1982, 1.8 percent of gross income was deducted for this reason, about as much as the capital gains deduction.

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Document Object Identifier (DOI): 10.3386/w0988

Published: "Are Tax Price Models Really Identified: The Case of Charitable Giving." National Tax Journal, Vol. 40, No. 4, pp. 629-633, (December 1987).

 
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