This post won’t be nearly as entertaining as some of the others, but it’s analysis I’ve been working on so I thought I’d include it. This research is part of a term research paper in my Labor Economics course that I will be turning in a final draft of on Friday.
All data comes from the Bureau of Labor Statistics’ Consumer Expenditures Survey which is one helluva data source that I have plans for in the future of this blog. It tracks how people spend their money and is very easy to access and use. Unfortunately for me, around the 1970s an organization called Giving USA started tracking charitable giving data and in the last decade put it behind a pay-wall. So the best thing the BLS has is a statistics called ‘cash contributions’, which combines all money given to 501(c)3s with all money that is part of continuing legal claims (alimony/child support), not sure why. But it’s fine because I looked at variation in charitable giving as a portion of income with respect to years and there’s no reason to expect significant variance in court settlements. Specifically I used 2007, 2008, 2009 to capture the most recent US economic downturn and because I am building on research by Russell James at the University of Georgia.
The variance between the sets of contributions as a % of income is not statistically significant.
Why not? A couple reasons
– Income Effect: several economists have studied charitable giving as a fixed portion of income, meaning that any household with x income will give y in charitable contributions
– Substitution Effect: other economists argue that in economic downturns there is no income effect, only a substitution effect that makes the marginal value of each dollar given to charity more valuable
– Survey limitations: the CEX attempts to reflect a set number of households from each income bracket in each year’s survey, so the survey does a poor job reflecting the population’s shifting between brackets as it does in an economic downturn
– Income brackets: this is the main one for me. The CEX’s income brackets are not equal, they skew way to the left and they cut off at $70,000+, meaning the upward sloping portion of the theoretical U Curve at charitable giving normally forms is out the window
And this time I wasn’t even trying to use shitty data.