Modelling charitable donations to an unexpected natural disaster: Evidence from the U.S. Panel Study of Income Dynamics

Abstract

Using household-level data, we explore the relationship between donations to the victims of the 2004 Indian Ocean tsunami disaster and other charitable donations. The empirical evidence suggests that donations specifically for the victims of the tsunami are positively associated with the amount previously donated to other charitable causes. This relationship exists when we decompose overall charitable donations into different types of philanthropy, with charitable contributions to caring and needy organisations having the largest positive association with donations to the victims of the tsunami. Furthermore, when we explore the impact of donations to the victims of the tsunami on future donations to charity, there is evidence of a positive relationship with the largest association with donations to caring and needy organisations. Hence, there is no evidence to suggest that unplanned spending on donations to an unforeseen natural disaster diverts future expenditure away from donations to other charitable causes.