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

43 Pages Posted: 24 Nov 2011 Last revised: 30 Nov 2011

See all articles by James Andreoni

James Andreoni

University of California, San Diego (UCSD)

A. Abigail Payne

University of Melbourne - Melbourne Institute of Applied Economic & Social Research; McMaster University, Department of Economics

Justin Smith

Wilfrid Laurier University

David Karp

McMaster University

Date Written: November 2011

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

Andreoni, James and Payne, A. Abigail and Smith, Justin and Karp, David, Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving (November 2011). NBER Working Paper No. w17618. Available at SSRN: https://ssrn.com/abstract=1964163

James Andreoni (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

HOME PAGE: http://econ.ucsd.edu/~jandreon/

A. Abigail Payne

University of Melbourne - Melbourne Institute of Applied Economic & Social Research ( email )

Level 5 111 Barry Street
Carlton, Victoria 3010
Australia
+61 3 9035 4219 (Phone)

McMaster University, Department of Economics ( email )

Hamilton, Ontario L8S 4M4
Canada

Justin Smith

Wilfrid Laurier University ( email )

75 University Ave W
Waterloo, Ontario N2L 3C5
Canada

David Karp

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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