Are Homeowners More Likely to Donate?

The economic and social benefits of homeownership are well documented in the literature. This article examines whether homeowners are more likely to make charitable donations. Using data from the Panel Study of Income Dynamics (PSID), we found strong evidence that homeowners on average are 8.86 percentage points more likely to make charitable donations than renters, after controlling for a wide range of household demographic and socioeconomic characteristics. The estimated results are robust to endogeneity issues of homeownership, unobservable household characteristics, and functional misspecifications. We provide evidence that tax incentives partially explain our findings. First, homeowners are more likely to donate through itemized deductions since it costs less. Second, high-income homeowners have higher marginal tax rates, which also provide an incentive to donate.