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Does Income Inequality Increase Charitable Giving?

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  • Payne, A. Abigail
  • Smith, Justin

Abstract

Do households react to changes in the distribution of income in their localities by changing their charitable giving? The theoretical prediction of the effects of income inequality on giving is unclear. We study how changes in income inequality measured at the neighbourhood and municipality levels affect charitable giving by households in Canada between 1991 and 2006. We find that increases in inequality increase giving. Results are sensitive to the geographic dispersion of low and high-income households in neighbourhoods within a municipality. The effect on donations is smaller in areas with high levels of inequality at both neighbourhood and municipality levels.

Suggested Citation

  • Payne, A. Abigail & Smith, Justin, 2015. "Does Income Inequality Increase Charitable Giving?," CLSSRN working papers clsrn_admin-2015-4, Vancouver School of Economics, revised 25 Jan 2015.
    • Handle: RePEc:ubc:clssrn:clsrn_admin-2015-4
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    Cited by:

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    2. Cai, Meina & Caskey, Gregory W. & Cowen, Nick & Murtazashvili, Ilia & Murtazashvili, Jennifer Brick & Salahodjaev, Raufhon, 2022. "Individualism, economic freedom, and charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 868-884.
    3. Cha, Moon-Kyung & Yi, Youjae & Lee, Jaehoon, 2020. "When people low in social class become a persuasive source of communication: Social class of other donors and charitable donations," Journal of Business Research, Elsevier, vol. 112(C), pages 45-55.
    4. Duquette, Nicolas J. & Hargaden, Enda P., 2021. "Inequality and giving," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 189-200.
    5. Jackson, Jeremy & Beaulier, Scott, 2023. "Economic freedom and philanthropy," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 148-183.
    6. Hossein Sabzian & Alireza Aliahmadi & Adel Azar & Madjid Mirzaee, 2018. "Economic inequality and Islamic Charity: An exploratory agent-based modeling approach," Papers 1804.09284, arXiv.org.
    7. Nicolas J. Duquette & Enda Hargaden, 2018. "Inequality, Social Distance, and Giving," Working Papers 2018-03, University of Tennessee, Department of Economics.
    8. Suss, Joel H., 2023. "Higher income individuals are more generous when local economic inequality is high," LSE Research Online Documents on Economics 119632, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    charitable giving; donations; income inequality;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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