The Effect of Ethnic and Religious Diversity on Charitable Giving by Tax Itemizers

The starting point for the present paper is that charitable giving might well be related to ethnic and religious diversity or heterogeneity in a metro area. Such heterogeneity was measured in two ways. The first method was a Herfindahl-Hirschman index, the probability that two persons are from different groups. The second method was to use a polarization index developed by Montalvo and Reynal-Querol (2005). The data was for charitable giving for metro areas in the United States for 2012; only the charitable giving for income tax itemizers was available. There was no evidence of a relationship between diversity and charitable giving for the complete data set. However, when four subsamples based on income groups are considered, diversity matters. Briefly, the coefficients for religious diversity were more often significant than for ethnic diversity; the coefficients for polarization more often significant than for the Herfindahl-Hirschman index.