Earned , Owned , or Transferred : Are Donations Sensitive to the Composition of Income and Wealth ?

We investigate the effects of different forms and sources of income (labor, asset, welfare, and other transfers) and wealth (home equity and other wealth) on household charitable donations (total, religious, secular, combined causes, and the needy) using data from the philanthropy module of the PSID. There are significant differences among income and wealth elasticities from each source. Thus we reject fungibility and find that traditional estimates of price and income elasticities are misleading. We also find that it is important to distinguish the effect of the presence of a source from the amount of that source – inframarginal effects are therefore important. Finally, we find that past receipt of inheritances increases current giving after holding income and wealth sources constant, a result that is difficult to reconcile with homo economicus.