Are Charitable Giving and Religious Attendance Complements or Substitutes? The Role of Measurement Error

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.     

A Review of: “Social Decision Making: Social Dilemmas,Social Values,and Ethical Judgments Edited by Roderick M. Kramer,Ann E. Tenbrunsel,and Max H. Bazerman”

ABSTRACT

Our ability to interpret, generalize, and build theory across public service motivation (PSM) studies is limited by lack of knowledge regarding the equivalence of different PSM measures that researchers frequently use. While past research has given considerable attention to validating multidimensional measures of PSM, this study investigates the psychometric properties of the global measures that have been used to provide much of the empirical evidence on PSM. Building on the lessons of other research using global and multidimensional measures, we first discuss the strengths and weaknesses of existing global measures of PSM relative to those of the multidimensional measures. After highlighting the potential merit of global scales, we then provide empirical justification for global scales. Using five different data sets to compare commonly used global measures of PSM, our findings suggest that these different measures are not only highly correlated with each other but also display a similar pattern and strength of relationships with important correlates of PSM. These findings suggest that these measures do tap into the same conceptual space and help validate our continued reliance on empirical studies that have used different measures to build our understanding of PSM.