Good Will Hunting: Do Disasters Make Us More Charitable?

Humans are usually compassionate, caring and empathetic toward others, but are we really hard-wired for altruism when a disaster hits? There is evidence that people exposed to natural disasters tend to behave more philanthropically, but most studies rely on small-scale surveys and experimental data. For that reason, this paper makes a novel contribution to the literature by investigating whether the COVID-19 pandemic has altered prosocial tendencies and charitable donations, using a novel daily dataset of debit and credit card transactions. I conduct a real-time analysis of actual charitable donations in three European countries (Estonia, Latvia, and Lithuania) and find that the COVID-19 pandemic and government interventions have no significant effect on how much people contribute to charities as a share of total spending. A higher preference for precautionary savings in the midst of the pandemic appears to outweigh altruistic behavior, while government welfare programs crowds out private charitable donations.