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Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving

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  • James Andreoni
  • Abigail Payne
  • Justin D. Smith
  • David Karp

Abstract

We explore the effects of local ethnic and religious diversity on individual donations to private charities. Using 10-year neighborhood-level panels derived from personal tax records in Canada, we find that diversity has a detrimental effect on charitable donations. A 10 percentage point increase in ethnic diversity reduces donations by 14%, and a 10 percentage point increase in religious diversity reduces donations by 10%. The ethnic diversity effect is driven by a within-group disposition among non-minorities, and is most evident in high income, but low education areas. The religious diversity effect is driven by a within-group disposition among Catholics, and is concentrated in high income and high education areas. Despite these large effects on amount donated, we find no evidence that increasing diversity affects the fraction of households that donate. Over the period studied, ethnic diversity rises by 6 percentage points and religious diversity rises by 4 percentage points; our results suggest that charities receive about 12% less in total donations. As areas like North America continue to grow more diverse over time, our results imply that these demographic changes may have significant implications for the charitable sector.

Suggested Citation

  • James Andreoni & Abigail Payne & Justin D. Smith & David Karp, 2011. "Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving," NBER Working Papers 17618, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17618
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    Cited by:

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    3. Gunnar Gutsche, 2019. "Individual and Regional Christian Religion and the Consideration of Sustainable Criteria in Consumption and Investment Decisions: An Exploratory Econometric Analysis," Journal of Business Ethics, Springer, vol. 157(4), pages 1155-1182, July.
    4. Asad, Sher Afghan & Banerjee, Ritwik & Bhattacharya, Joydeep, 2020. "Do workers discriminate against their out-group employers? Evidence from the gig economy," ISU General Staff Papers 202002230800001098, Iowa State University, Department of Economics.
    5. Rose Anne Devlin & Wenzhuo Zhao, 2016. "Philanthropic Behaviour of Quebecers," Working Papers 1607E, University of Ottawa, Department of Economics.
    6. Benos, Nikos & Kammas, Pantelis, 2018. "Workers of the world unite (or not?) The effect of ethnic diversity on the participation in trade unions," MPRA Paper 84880, University Library of Munich, Germany.
    7. Simixhiu, Amantia & Ziegler, Andreas, 2018. "On the relevance of income and behavioral factors for absolute and relative donations: A framed field experiment," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181600, Verein für Socialpolitik / German Economic Association.
    8. Duquette, Nicolas J. & Hargaden, Enda P., 2021. "Inequality and giving," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 189-200.
    9. Matz Dahlberg & Karin Edmark & Heléne Lundqvist, 2012. "Ethnic Diversity and Preferences for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 41-76.
    10. Orkhan ISMAYILOV, 2016. "Flypaper Nonprofits: Crowding In And Crowding Out Effects Of Grants On Nonprofit Finance," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 77-87, December.
    11. Dimitrova-Grajzl Valentina & Grajzl Peter & Guse A. Joseph & Smith J. Taylor, 2016. "Racial Group Affinity and Religious Giving: Evidence from Congregation-Level Panel Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 689-725, April.
    12. Polipciuc, Maria & Cörvers, Frank & Montizaan, Raymond, 2021. "Peers' Race in Adolescence and Voting Behavior," IZA Discussion Papers 14140, Institute of Labor Economics (IZA).
    13. Nicolas J. Duquette & Enda Hargaden, 2018. "Inequality, Social Distance, and Giving," Working Papers 2018-03, University of Tennessee, Department of Economics.
    14. Mylonidis, Nikolaos & Chletsos, Michael & Barbagianni, Vanessa, 2019. "Financial exclusion in the USA: Looking beyond demographics," Journal of Financial Stability, Elsevier, vol. 40(C), pages 144-158.
    15. Lücke, Matthias & Omar Mahmoud, Toman & Peuker, Christian, 2012. "Identifying the motives of migrant philanthropy," Kiel Working Papers 1790, Kiel Institute for the World Economy (IfW Kiel).
    16. Kok, Lucille & Oosterbaan, Veerle & Stoker, Hester & Vyrastekova, Jana, 2020. "In-group favouritism and social norms: Public goods experiments in Tanzania," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 85(C).
    17. Insler, Michael A. & McMurrey, Bryce & McQuoid, Alexander F., 2019. "From broken windows to broken bonds: Militarized police and social fragmentation," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 43-62.
    18. Jones, Daniel B. & Zhan, Crystal, 2020. "Ethnic diversity and citizens’ support for local public good provision: Evidence from California parcel tax elections," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 108-130.

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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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