Are Political and Charitable Giving Substitutes? Evidence from the United States
100 Pages Posted: 15 Mar 2021 Last revised: 31 Mar 2021
Date Written: March 2021
We provide evidence that individuals substitute between political contributions and charitable contributions, using micro data from the American Red Cross and Federal Election Commission. First, in a lab experiment, we show that information on the importance of charitable giving increases donations to charities and reduces donations to politics, while information on the importance of political campaigns has the opposite effect. We also show that similar results hold in observational data. We find that foreign natural disasters, which are positive shocks to charitable giving, crowd out political giving. We also find that political advertisement campaigns, which are positive shocks to political giving, crowd out charitable giving. Our evidence suggests that some individuals give to political and charitable causes to satisfy similar needs.
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