Within the framework of traditional economic theory a charitable contr
ibution is considered a consumption good. As such, the demand for givi
ng is affected by changes in the price of giving and current income. M
oreover, changes in wealth, expected future income, and 'habits' may a
ffect giving. Previous empirical studies of giving have not considered
the possibility of the impact that donor's wealth might have on givin
g. One way of accounting for such possible effect is to include variou
s sources of donor's income in the demand function. Using the Internal
Revenue Service Individual Tax Model Files and a dynamic econometric
model of charitable giving, we estimate demand for giving for various
income groups and examine impacts of various income sources on giving.
The findings indicate that the higher the share of wages and dividend
s in disposable income, the higher the amount of giving. The amount of
giving is lower when the share of interest, capital gain, or pension
income is higher.