Security fosters generosity: Social security protection and charitable giving

Charitable giving in low- and middle-income countries significantly lags behind that of advanced economies. However, little is known about how an individual’s risk exposure may affect his or her charitable giving. To study this question, this paper examines whether and how social security protection against economic risk influences beneficiaries’ charitable giving behavior. Using China’s expansion of public long-term care insurance (LTCI) targeting the elderly as a quasi-experiment and leveraging representative individual-level panel data, our triple differences estimation shows that LTCI coverage significantly increases charitable giving: the likelihood of donation rises by 8 percentage points (a 80% increase), and the donation amount increases by 51% (equivalent to 18 yuan). Up to 2018, social security protection from the LTCI expansion managed to reduce the China-US gap in donation participation by 14.3 percent. The charitable effects of enhanced social security protection against economic risks are driven by decreased precautionary savings and improved subjective wellbeing among those protected senior beneficiaries: these effects are more pronounced among beneficiaries with greater pre-reform risk exposure (e.g., worse health, and poorer family and social support), and larger improvement in subjective wellbeing post-reform. Additionally, the security provided by the LTCI induces more charitable donations from religious beneficiaries.