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Is the Supply of Charitable Donations Fixed? Evidence from Deadly Tornadoes

Tatyana Deryugina, Benjamin M. Marx

NBER Working Paper No. 27078
Issued in May 2020
NBER Program(s):Environment and Energy Economics, Public Economics

Do new societal needs increase charitable giving or simply reallocate a fixed supply of donations? We study this question using IRS datasets and the natural experiment of deadly tornadoes. Among ZIP Codes located more than 20 miles away from a tornado's path, donations by households increase by over $1 million per tornado fatality. We find no negative effects on charities located in these ZIP Codes, with a bootstrapped confidence interval that rejects substitution rates above 16 percent. The results imply that giving to one cause need not come at the expense of another.

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Document Object Identifier (DOI): 10.3386/w27078

 
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