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My paper "Is the Supply of Charitable Donations Fixed? Evidence from Deadly Tornadoes" (joint with Benjamin Marx) was just accepted at AERI!
https://www.aeaweb.org/articles?id=10.1257/aeri.20200230
https://www.aeaweb.org/articles?id=10.1257/aeri.20200230
We address the longstanding question of whether increased charitable giving to one cause simply crowds out charitable giving to another causes rather than increases total giving, i.e., do people have a fixed charity budget?
To answer this question, we exploit the random nature of fatal tornado strikes and use them as exogenous sources of demand for charitable giving. If such strikes merely shift giving between causes, we should see no increase in charitable giving on net.
Instead, we find that total charitable donations in ZIP codes that are in the same state but at least 20 miles away from a tornado’s path increase by $2 million dollars per tornado fatality (for context, most fatal tornadoes only kill a few people).
Thus, people don't have a fixed budget for charitable giving, at least in this context.
