THE CHARITABLE RESPONSE TO NEED AND PERSISTENT EFFECT ON GENEROSITY: EVIDENCE FROM TORNADO STRIKES

Benjamin M. Marx, PhD

ASSISTANT PROFESSOR OF ECONOMICS
AT THE UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN

Does charitable giving respond to new demands, and if so, does the response come at the expense of other charitable causes? To answer these questions, we exploit exogenous variation in need arising from the random event of a nearby tornado. We use location fixed effects estimators and examine changes in charitable donations claimed for tax deductions in IRS data on individual income taxes by geographic area. We test for heterogeneous responses by tornado severity, which gives measures of local need, and explore whether charitable responses vary with distance from the affected area.

Generosity,Tornado Strikes,Tax deductions,IRS data,Geography,Charitable Giving,