† Duffy, Hansen, and Tian: Lilly Family School of Philanthropy at Indiana University. Steinberg: Dept. of Economics, IUPUI and Lilly Family School. We’d like to thank Russell James, Richard Williams, Joe Canner, and Julie Goldberg Springer for helpful discussions. Since 2001, the Philanthropy Panel Study has been funded by foundations, corporations, and individuals. These include the following, who supported the Center Panel with grants of $100,000 or more: The Atlantic Philanthropies, The Bill & Melinda Gates Foundation, the Charles Stewart Mott Foundation, and the John Templeton Foundation.

Draft, 7/6/2014

Not for Citation without Permission of Authors

Wattsamatta wit U, or

U Really Got a Hold on Me By Barbara Duffy, Richard Steinberg, Ruth Hansen, and Yuan Tian†

“It's an irony that growing inequality could mean more money for philanthropy. In the US, quite a few of the ultra-rich have taken to heart the 19th century industrialist and philanthropist Andrew Carnegie's comment that it's a disgrace to die wealthy. So far, however, little of the money accumulated by the top 1% during the longest boom in British history has yet found its way into social causes. Many hope that this will change. But others are ambivalent about what this could mean - especially the risks of rich people exercising even more power over poor communities.” (Mulgan, 2007)

Introduction This paper concerns a simple description of the pattern of charitable donations – the so-called U-shaped curve. The conventional wisdom is that a graph of generosity (defined as donations divided by income) against income is U-shaped, with the poor and the rich giving a larger share of their income to charity. We reexamine this conventional wisdom, using USA panel data from the 2001 through 2009 waves of the Panel Study of Income Dynamics (PSID) and its accompanying module, the Philanthropy Panel Study (PPS).

Why is a simple description of interest to scholars? As the opening quote reveals, quite a lot hinges on this description. First, inequality is growing around the world and regardless of growth remains a major challenge for societies. Governmental solutions to inequality are usually underfunded and rely primarily on coercive taxation. Civil society solutions rely largely on voluntary donations of time, treasure, and money. Private nonprofit organizations address the problem through direct

1

redistribution, efforts to address the causes of poverty, and efforts to improve governmental solutions. We know little about the potential for nonprofits to do more (what we do know is largely in Clotfelter, 1995), but patterns of income, wealth, and giving (particularly giving to social causes) clearly matter in this debate.

Second, growing inequality would lead to an increase in total giving if the U-shape is correct. In response, public policies supporting donations may need reform, and managerial planning within nonprofits would need to account for this factor in their investment and endowment policies. Third, charities already focus on soliciting donations from the rich, but mayhap they would like to add the generous poor to their donor lists. Finally, the shape of the income/generosity relationship shapes normative discussions and the social construction of the role of philanthropy in society. Should the middle be ashamed of their relative stinginess? Can this shame be used to raise the middle of the U?

Except for a small foray by Wilhelm (2005), we believe we are the first to analyze PPS data for this question. The PSID provides a large nationally-representative sample of households, and the PPS reports giving for itemizers and nonitemizers alike, in total and to specified categories of causes. We use this data to replicate and extend the findings of James and Sharpe (2007) regarding how giving by “the committed few” is responsible for the downward-sloping half of the U, and employ a variety of econometric techniques not previously used to study this question. We examine whether the basic shape holds for giving in different years, to different causes, and by different categories of people. All our regressions control for wealth, and we also look at the shape of the relationship between giving/wealth and wealth.

The next section discusses theories that justify use of the giving/income ratio as a measure of generosity and theories offered to explain the U shape. Section 3 reviews previous estimates, section 4 concerns our data and basic empirical specification, section 5 contains results, and a final section does what final sections always do – concludes.

Theory Overview

Most of the literature addressing the U-shape phenomenon presents it as an empirical regularity. Often, it is applied to suggest the moral superiority of those whose generosity exceeds the norm, particularly those of lower income groups, implying the moral inferiority of less-generous middle income people. Positive theories attempt to explain the observed patterns of generosity without moral judgment. These generally pursue one of two strategies: either offering reasons why “donations divided by income” is a poor measure of generosity, or offering one or more of a variety of economic, sociologic, psychological, or cultural explanatory factors. It is likely that different dynamics manifest at different points along the curve. Thus, existing theories tend to focus either on the downward slope to the left of the minimum of the curve, or on the upward slope to the right of the minimum: roughly, those with lower income, and those with higher income.

Measuring Generosity

2

In defining generosity as “donations divided by income,” we attempt to measure the relative sacrifice made by donors. The idea has significant cultural appeal, finding explicit echo in the biblical parable of the widow’s mite. In the story, Jesus contrasts the giving of large sums by the rich to that of a poor widow, whose two copper coins represented her total wealth, and are therefore more valuable than the greater sums given out of surplus (Luke 21:1-4; Mark 12:41-44). In Jewish tradition, ẓedakah is an obligation even for those themselves receiving charity, with regular giving of between ten to twenty percent of income encouraged (Posner, Ben-Sasson and Levitats, 2014, citing Git. 7a; Ket. 50a; Maim. Yad., loc. cit. 7:5). Islam mandates zakat (charitable alms), measured by a percentage of income, as well as encouraging sadaqa, additional donations, for those who can afford it (Lunde, 40). Generosity has strong emotional and social resonance across many traditions, and the value of the gift may be measured either by total amount or as a measure of sacrifice. This latter concept is pursued by conceptualizing generosity as indicated by donations as a portion of income.

While dividing current donations by current income is an operational guideline, in many cases it does not accurately measure the degree of relative sacrifice. Current donations may be financed out of accumulated wealth, rather than current income. This is the case in many large gifts of cash, appreciated securities, artwork, or other assets; it would also describe gifts by retirees, whose current income is minimal but whose assets support donations. Current consumption can also be financed out of expected future earnings, as in items paid for using credit cards, home equity lines of credit, or other loans. The measurement does not take into account family size: fixed expenses rise with the addition of each family member, resulting in less surplus income available for discretionary use. The relative sacrifice inherent in a charitable donation also varies according to other large expenses not captured by income or family size, such as medical expenses, mortgages, etc. Formal measures of donations do not capture goods, services, or cash provided to neighbors, friends, or relatives, which also reduce the disposable income and affect the level of relative sacrifice for a given household. Finally, donors may exercise control over the timing of giving, “bunching” their gifts in one year in order to make a large enough gift to “make a difference,” or in order to take advantage of tax situations. The income/generosity relationship looks different when 5-year average giving and 5-year average income are used (Auten and Rudney, 1990). Charitable bequests and other planned giving techniques further complicate the interpretation of the current income generosity measure.

Accepting these flaws in the use of the ratio of donations to income to measure generosity, we also identify issues in the method of measurement in many sources of data. Meyer and Sullivan (2003) find that low-income households typically underreport income in surveys, lowering the denominator and effectively exaggerating the level of generosity. Data retrieved from tax records has a different challenge: giving information is only available for itemizers. Low-income taxpayers may itemize as a consequence of their large charitable donations, or due to high wealth, a selection bias that also exaggerates the generosity of the category.1 Finally, many tax-data studies use “adjusted gross income” for the denominator, excluding capital gains and other earnings during the year. Auten and Rudney (1990) is an early exception.

1 Wilhelm (2005) calculates the impact of these biases through simulated tax effects on survey data from all givers.

3

Explaining the Left Branch

Several theories have been suggested to explain the relatively greater generosity of the lowest income segments compared to those with mid-level income.

Wiepking (2007), drawing on Andreoni (2004), Harbaugh (1998), Fischbacher et al (2001), Frey and Meier (2004), Shang and Croson (2005), and Bekkers (2006), suggests the presence of a giving standard that is an amount, rather than a percentage. Jencks (1987) refers to the idea as “paying your dues,” and suggests the tendency is more prevalent in settings such as churches and workplace giving. This focus on a set amount would result in giving a greater percentage of income for lower income households meeting the social giving standard.

Another possibility is that the correlation of generosity to income levels may be spurious, at least in part. Several studies assert both higher giving by religious households, and a greater incidence of religiosity among lower income individuals (Sharpe and James, 2007; Schervish and Havens, 1995a; Jencks, 1987). Thus, greater giving may correlate with low income, but is not a function of income per se.

The composition of income sources may matter. Brooks (2002) suggests that those receiving public assistance, who would tend to be among the lower income households, become alienated from society and correspondingly less generous toward others.

Conversely, Piff et al (2010) argue that greater prosocial behavior is found among lower income communities due to increased interdependence, and a resulting orientation to the needs of others (relying on Kraus and Keltner, 2009; Krauss, Piff and Keltner, 2009). Their series of studies measured generosity, trust, and helping behavior, finding greater incidence in lower-income study participants than in higher-income participants. Generosity, in these studies, was assessed both through observations of participants in an experimental dictator game,2 and through a survey asking participants to allocate ideal portions of annual income to different household expenses, including charitable donations.

Explaining the Right Branch

Complementing the attention paid to the left branch of the U, several theories are offered to explain greater generosity in giving among the highest levels of income.3

Ostrower (1995) (cited in James and Sharpe, 2007) argues that giving acts as a luxury good. As income increases, greater disposable income is available, and an American culture of philanthropy prompts households to “dispose” of some of the income charitably. Jencks (1987) finds that an impulse to give from surplus operates commonly on gifts to hospitals and major universities, and is likely 2 In the dictator game setting, participants are allocated a sum, and informed that they can voluntarily allocate a portion to another, unknown, individual, which will reduce their personal payment. 3 McClelland and Brooks (2004) address both branches in observing that if the income elasticity of giving is constant and greater than 1 (as necessary for a rising curve on the right), then only certain values of elasticity will yield a U shape.

4

prevalent within arts giving, as well, further supporting the idea that distinct dynamics affect donations to different charitable recipients.

In what we call the Willy Sutton effect,4 we recognize that one of the chief determinants of giving is being asked (Yörük, 2009). Prospect researchers and fundraisers consider household resources as a significant aspect in identifying prime prospects. Perhaps higher-income individuals prove to be more generous in response to more persistent pursuit.

Distinct from income, but often correlating with it, is the possible presence of class-based obligations. Noblesse oblige describes the social obligation of those privileged by wealth, power, and prestige to contribute to society, particularly to the worthy poor or to projects benefiting an entire community. Robbins (2006) describes such obligatory philanthropy as early as Ancient Greece, in which private wealth was viewed as held in trust for the community, with a portion expected to be used for the betterment of the city.

Glazer and Konrad (1996) and Harbaugh (1998) discuss a conspicuous generosity dynamic as a variant of conspicuous consumption. This theory asserts that one function of high-level donations is to purchase social prestige for the donors. Adam (2009) illustrates this phenomenon in the integration – or sometimes emphatic exclusion – of rising nouveau riches, women, and religious minorities in the late 1800s and early 1900s. While philanthropic institutions could emphasize social divisions in prosperous cities, such as New York or Leipzig, in cities with less wealth well-placed donations allowed well-to-do newcomers entry to their city’s elite ranks. Looking back further, Cavallo (1995, as discussed in Robbins, 2006) describes early modern European urbanites’ use of philanthropic donations to high profile recipients as symbols of prestige, with philanthropy itself a stylish activity.

Finally, in any measure of means, an extreme outlier can skew the results. This “Gates effect” results in describing an entire class in exaggerated terms due to the extreme actions of one or two individuals.5

Selected Literature Review In his 1950 book Philanthropic Giving, F. E. Andrews analyzed the ratio of contributions to

income for selected income classes every four years from 1922 to 1946. Although there is generally an upward-sloping relationship between income and generosity, the downward-sloping left branch of the U is not evident until 1946.

[INSERT FIGURE 1] – ANDREWS DATA

4 Willy Sutton was a successful bank robber whose credits included a stint on the FBI’s Ten Most Wanted List and as a spokesperson for New Britain Bank & Trust Company’s MasterCharge, which had the cardholder’s picture on it for identity protection. A persistent urban legend claims that when an interviewer asked him why he robbed banks, his response was, “Because that’s where the money is.” http://www.snopes.com/quotes/sutton.asp 5 From visual inspection of our dataset we conclude that none of Mr. Gates, Mrs. Gates, or Mr. Buffet are contained within.

5

Andrews attributed the left branch to the 1944 introduction of a standard deduction for the personal income tax. He argued that in 1946, lower income households chose in great number to take the standard deduction rather than itemize.6 As noted above (Theory, p. xx), this introduced selection bias for those lower income households choosing to itemize, so that the contribution ratios calculated for these lower income households was too high.

Clotfelter and Steurle (1981) found a U-shaped pattern in their analysis of 1975 IRS data. The pattern was also described by Jencks’ analysis of IRS data from 1981; when considered with data from the 1981 survey data collected for Independent Sector’s Giving and Volunteering in the United States report,7 Jencks (1987) concluded that the U shape held for the general population as well as for itemizers. Using a panel of IRS data from 1991-1995, Auten, Clotfelter, and Schmalbeck found the U shape when mean giving within each bracket is used for the numerator of measured generosity levels, but distinguish that the pattern does not hold when using median measures.

In a series of papers, Schervish and Havens (1995a, 1995b, 1998, 2001) challenged the U shape, particularly the left branch suggesting greater generosity by lower income households. Relying predominantly on the Independent Sector’s Giving and Volunteering in the United States survey data, augmented by the Survey of Consumer Finances, Schervish and Havens consistently found that the downward-sloping left branch disappears when both donors and nondonors are included in the analysis. They conclude that the apparent generosity of the poor is an artifact of the exclusion of more numerous nondonors (1995a). Their studies, which oversampled the wealthy, verified the upper slope for higher generosity at higher income levels (1995, 1998). Schervish and Havens (2001) emphasized the importance of considering wealth in addition to income measures when examining questions of generosity.

The most comprehensive exploration to date is a study by James and Sharpe (2007) using bivariate and regression methods on data from the Consumer Expenditure Survey. The Consumer Expenditure Survey does not oversample the wealthy, but is better than tax data for exploring the left branch of the U as it includes nonitemizers. They found U shapes for total giving and document the same pattern when giving is split into religious and secular giving, although the non-religious shape is less pronounced. They criticized the Schervish and Havens studies, arguing that the data and analytic methods used by the duo systematically undercount giving by the poor. James and Sharpe conclude that the U shape is valid overall, but what is true for average donations is not typical behavior for individual households. They found that the “committed few,” households giving at least 10% of their after-tax current year income in any given year, are responsible for making the relation U-shaped. When these households are removed from the sample, the U shape disappears. The “committed few” tend to be wealthier than other donors in a given income category, and are also more likely to be of retirement age. James and Sharpe also encourage the consideration of not only income, but religion and wealth in further examination.

Wiepking (2007) is distinctive in this group in that her study is the only one not using data from the United States: she uses the Giving in the Netherlands Panel Study 03, a representative sample with a limited number of high-income donors, measuring annual after-tax income and giving to ten categories of charitable causes. She decomposed the determinants of the U shape into those affecting the probability a household will make a donation and those affecting the amount given by givers using

6 61% of taxpayers in his lowest identified bracket chose the standard deduction in lieu of itemizing; 40% of taxpayers in his next highest bracket did so. 7 This report measures gross income in positive brackets; no wealth information is collected.

6

Heckit. Wiepking’s findings support a “standard of giving” theory among lower-income individuals, finding that increased income has a negative correlation with measured generosity. This negative relationship is stronger for religious donations, but it is not explained by stronger religious affiliation.

We draw from a panel study with some similarities to the Netherlands data set, described in greater detail in the next section, replicating much of the methodology followed by James and Sharpe to determine whether their findings of a U shape among the general population in the United States are supported by the data in the PSID/PPS.

Data We use data from the Panel Study of Income Dynamics (PSID) and the 2001, 2003, 2005, 2007

and 2009 waves of the Philanthropy Panel Study (PPS), a module appended to the PSID since 2001. The PPS allows us to study donations by all donors, regardless of itemization status, and to look separately at total giving, religious vs. secular giving, and up to ten specific causes.

We include the three major PSID samples in our sample: the nationally-representative Survey Research Center (SRC) sample, the Survey of Economic Opportunity (SEC) sample (which oversamples southern urban low-income households), and the Immigrant refresher sample. We dropped observations for those households that were not asked the survey questions on philanthropic giving and volunteering, and for those households where the respondent responded “don’t know” or “refused” when asked whether or not they had made a charitable gift of $25 or more in the prior year.

In most cases, data gathered in one wave refer to the previous calendar year. All dollar values have been converted to 2013 levels using the CPI-U. Table 1 displays summary statistics for the 23,7928 donor households constituting our baseline sample9.

[INSERT TABLE 1] – DESCRIPTIVE STATISTICS

The quality of the giving data depends on whether interviewers and respondents are experienced, and whether memory prompts include a comprehensive list of causes one might donate to and methods of donations. Because the PPS is administered by the PSID staff to the PSID sample, the experience is there. The PPS has a far lower item-nonresponse rate than other giving surveys, and reported levels of giving track those in the “gold standard” cross-sectional study (the 1974 National Survey of Philanthropy) very well up to the 90th percentile of the income distribution (Wilhelm, 2006; 2007). Wilhelm (2005; 2007) cautions that the PSID does not include enough observations at high income levels to provide precise estimates of giving, and this might hamper our estimation of the right half of the U.

Data on income and wealth from the PSID are of particularly high quality [Gouskova et al (2010); Li et al (2010); Curtain et al (1989)]. Again, interviewers experienced in eliciting such sensitive information and respondents experienced in responding to such questions provide a measure of quality

9 Note to readers of the draft paper: since some of our analyses currently use or will use observations from nondonors, we will include descriptive statistics all 39,252 households in the sample in the future.

7

assurance not found in most other surveys used for these purposes. Finally, the PSID has an attrition rate of less than 2% between biennial waves of the survey.

Results Committed Households

In 2007, James and Sharpe returned to the question of the U-shaped giving curve, using data from the 1998-2001 Consumer Expenditure Survey (CES). They demonstrated how Schervish and Havens could have obtained spurious findings with their assumptions, and reasserted the presence of the U-shaped giving curve with their data.

Using data from the Panel Study on Income Dynamics with the Philanthropy Panel Study Supplement, we first replicated James and Sharpe’s results. We expected that the income reported in the PSID data would be higher than that from the CES. Indeed, the PSID total family income variable is different, representing pre-tax income from labor, business, assets, transfers and social security for head, wife and other family members. Some of these sources are not fully accounted for or not accounted at all in the CES income measures used by James and Sharpe (adjusted gross income and income after taxes). We also expected that both the number of givers and the amounts given to charity would be higher, as a result of the multiple prompts and unfolding brackets in the PSID/PPS survey.

Consistent with James and Sharpe’s findings, the percentage of households making charitable gifts is upward sloping with income, although the relationship is steeper for the PSID/PPS data. About 24% of households (vs. 34% for the CES data) with incomes less than $10,000 make charitable gifts, and more than and 92% (vs. 75%) of those with incomes over $150,000 are donors. This finding is consistent with both the higher income reports and the higher rates of giving that we expected to find in the PSID data.

[INSERT FIGURE 2] – PERCENTAGE OF HOUSEHOLDS MAKING CHARITABLE GIFTS

Table 2 compares measured generosity (reported donations/reported income measure) in each income bracket for the CES and the PSID/PPS. Our figures are only slightly higher than those from the CES except in the lowest income bracket, where overall giving as a percentage of income in the PSID profile is nearly three times that reported for the CES data in the same bracket, 13.4% vs. 4.6%. This produces the left-hand side of the U-shape, with no apparent counterpart to the right as income increases. Consistent with the CES data, generosity to religion is about twice that of generosity to secular causes, except in the highest income bracket where they are roughly the same.

[INSERT TABLE 2] -- COMPARISON OF HOUSEHOLD INCOME GIVING PROFILE

James and Sharpe showed that when “committed households” giving more than 10% of their income were removed from the sample of households, a roughly flat line resulted, hovering between 0.8 and 1.2%, and increasing only slightly with income. Our analysis produces similar findings.

Table 3 and Figure 3 provide further evidence that the under $10,000 income group in the PSID/PPS data is worth examining in further detail. When the “committed donors” are removed from the sample, giving in this bracket is .38% of income. And while only 24% of households in this income bracket are donors, 60% of these donor households give more than 10% of their income, nearly twice the proportion that James and Sharpe found in their lowest bracket.

8

[INSERT TABLE 3] -- COMPARISON OF HOUSEHOLDS MAKING CHARITABLE GIFTS

[INSERT FIGURE 3] – PERCENTAGE OF INCOME GIFTED IN EACH INCOME INCREMENT

The PSID/PPS contain 34 households with total family income less than $0. We created additional brackets for negative income and for income above the James/Sharpe top code of $150,000 to observe their impact on the shape of the curve. The handful of donors with incomes less than $0 make contributions that are a high percentage in relation to their (negative) income.

[INSERT FIGURE 4] – PERCENTAGE OF INCOME GIFTED IN EACH INCOME INCREMENT—MORE INCOME BRACKETS

Some of the poor appear very generous, indeed. But as others have observed, it is likely that some households in the low income brackets may be income poor but asset rich. We replicated James and Sharpe’s table comparing the liquid assets and marital status of “committed donor” households to all others. Our results are consistent with James and Sharpe: average wealth for households giving 10% or more of income in both sets of data is roughly 2.5-3 times that of all other households in the sample. The multiplier is even higher in the lowest income bracket -- nearly ten times that of other households in the under $10,000 group for both sets of data.

[INSERT TABLE 4] – COMPARING COMMITTED DONOR HOUSEHOLDS (GIVING 10% OR MORE OF AFTER-TAX INCOME TO CHARITY) TO OTHER HOUSEHOLDS

Comparing PSID/PPS with CES data for those households making any donations, we observe the left branch of a U with a starting point that is three times as high at the lowest income bracket, declining more steeply and leveling off when income exceeds $20,000. We observe no upward slope at higher income levels, even when we create brackets for household income greater than $150,000, the truncation point for the CES data.

In summary, our data enable us to replicate the findings of others that giving is U-shaped but largely due to the presence of the committed few. We found additional intriguing patterns within the lowest and highest categories of income. Next, we turn from analyzing the average behavior of income-bracketed groups to analyzing individual household data. This allows us to use multivariate methods that remove many of the confounding factors hindering the interpretation of bivariate analyses.

Regressions

Table 5 displays mean donations as a percentage of total family income (we will call this generosity) by income brackets. Mean generosity for donating households with income under $10,000 is 57%, falling sharply and oscillating around 2% as income rises. The same pattern is observed when negative income and wealth are excluded from the sample, and for households with the bottom 90% and the top 10% of wealth. Generosity for the lowest income bracket jumps to 85% when households with negative income and wealth are excluded, falls to a healthy 42% when the wealthiest 10% are excluded, and skyrockets to 364% of income for the wealthiest households within this bracket. The left branch of the U is quite noticeable, but the right branch is nowhere to be seen.

[INSERT TABLE 5] – DONATIONS AS A PERCENTAGE OF TOTAL FAMILY INCOME

To formally test for the u-shape, we employed a least squares regression of the quadratic model for donor households:

9

𝑔𝑒𝑛𝑒𝑟𝑜𝑠𝑖𝑡𝑦 = 𝛽1 + 𝛽2ℎ𝑜𝑢𝑠𝑒ℎ𝑜𝑙𝑑 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝛽3ℎ𝑜𝑢𝑠𝑒ℎ𝑜𝑙𝑑 𝑖𝑛𝑐𝑜𝑚𝑒2 + 𝛽4𝑤𝑒𝑎𝑙𝑡ℎ + 𝐵5𝑤𝑒𝑎𝑙𝑡ℎ2 + 𝛽𝑘𝑐𝑜𝑛𝑡𝑟𝑜𝑙𝑠

Because the dependent variable is censored at zero, OLS suffers from censorship bias. To reduce, but not eliminate, that bias, we estimated by OLS on the subsample of those whose measured generosity exceeds zero.10 Standard errors are robust, clustered on family id. Family id identifies the original family unit in the PSID from whom the current family is descended. This allows for clustering by the extended family members present in the sample).

Our analysis revealed the expected U-shape for the baseline sample of donating households, with and without home equity included in measured wealth. Omitting those with negative income or wealth makes little difference. Coefficients on income, income squared and wealth are all significant, as are several control variables. (See Table 6.) Although the estimation produces a U-shaped result, the income level at which generosity is estimated to rise is about $2.9 million, a seemingly absurd result, but one that is consistent with the portion of the curve that we have observed descriptively.

[INSERT TABLE 6] – BASELINE ESTIMATES OF GENEROSITY AND VARIATIONS

The U-shape is present and results are comparable when we estimate our model for each of the five years of data (see Table 7), although there is some variation in minima and marginal effects.

[INSERT TABLE 7] – BASELINE GENEROSITY BY YEAR

The same is true for estimates of baseline generosity by recipient categories, where some, but not all, of the coefficients on income are statistically significant but point estimates universally identify a U, rather than an upside-down U.

[INSERT TABLE 8] – BASELINE ESTIMATES BY RECIPIENT CATEGORIES

Split-sample estimates by sex and marital status , race, ethnicity, and retirement status of the household head produce the same U-shape. Income levels at the minimum of the estimated U are slightly more realistic for single, African American and retired heads (approximately $500,000), but these are hardly middle-class levels of income.

[INSERT TABLE 9] – BASELINE ESTIMATES, SAMPLE SPLITS

Finally we estimated generosity as a share of wealth donated, with and without home equity. The U-shape is still evident, but the wealth level at the estimated turning point of the U is $40 million (using total wealth) or $38 million (if home equity is excluded). We are less confident about the shape here because the two wealth variables are neither individually nor jointly significant.

[INSERT TABLE 10] – GENEROSITY MEASURED AS SHARE OF WEALTH DONATED

10 We experimented with tobit, which avoids censorship bias but suffers from other statistical problems. However, our results were so puzzling that we want to investigate further before sharing results. We also plan to use alternative estimators to deal with censorship.

10

So the question is, what’s going on? With numerous variations on our baseline estimate, we observe a left branch, which is quite extreme, but not a right branch that is within a realistic range of income. We might start by asking, why do we think there’s a U, anyway? But before we take that blasphemous position, we re-examine our estimator.

In every case where we estimated the shape using a quadratic specification, the minimum of the resulting parabola occurred at an implausibly large level of income. In addition, our bivariate analysis suggests that more is happening in the lowest income brackets. This suggests that in fitting a parabola to the data, we are putting a jagged peg into a U-shaped box. This suspicion is confirmed in two specification tests for the baseline model. Figure 5 shows that there are numerous large residuals (deviations between predicted and actual) for low income observations. A Ramsey RESET test shows that we can reject the hypothesis of no specification error with extreme confidence (F(3, 23429) = 32.67, Prob > F = 0.0000). The RESET test does not allow us to uncover the reason for rejection, but improper functional form is consistent with this rejection.

[INSERT FIGURE 5] – BASELINE RESIDUALS VS. INCOME

We begin to address this problem using linear splines for income in our functional form. This approach asserts that the income/generosity function is a series of connected line segments with slopes determined by the data. The line segments are joined at “knots.” Our knots are set at each quintile of the income variable, with additional knots at $5,000, $10,000, and $20,000 to provide more flexibility at the lowest levels of income. Figure 6 illustrates the result. The black line is the predicted level of generosity at each income level, and the shaded area shows the pointwise 95% confidence interval. Perhaps we could describe this as a U with speed bumps, but the bottom of this U is around family income of $10,000, much lower than found elsewhere. Although a variety of other shapes could fit within the confidence band, the limits are such that there must be a downward-sloping portion between incomes of $0 and $10,000. After that, we have an upward-sloping section, but peak generosity is predicted for income of $20,000 and the function is downward-sloping for higher levels of income.

[INSERT FIGURE 6] –AVERAGE PREDICTED GENEROSITY USING LINEAR SPLINES

Why do our results differ so much from those published previously? Perhaps we have a problem with our specification (we will explore that in future revisions of this paper, with different knot points, estimators, and additional control variables). When we replicate James and Sharpe’s (2007) findings, we show that we can obtain the left branch of the U using bivariate methods and produce a bottom at an income level consistent with other studies. We think the reason our results differ is that we control for wealth, education, and household demographics at the individual level. We are less confident in our finding that the right half is downward sloping, which could be an artifact of the sampling strategy employed by the PSID in light of our bivariate findings on bracketed income levels.

Conclusion Wattsamatta wit U? Quite a lot.

11

Bibliography Adam, T. (2009). Buying Respectability: Philanthropy and Urban Society in Transnational Perspective,

1840s to 1930s (Philanthropic and Nonprofit Studies). Bloomington: Indiana University Press.

Andrew, F.E. (1950). Philanthropic Giving. New York: Russell Sage Foundation.

Auten, G., & Rudney, G. (1990). The variability of individual charitable giving in the US. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 1(2), 80-97.

Brooks, A. C. (2002). ‘‘Welfare Receipt and Private Charity.’’ Public Budgeting and Finance 22(3):100–13.

Clotfelter, C. T. (1995). Who Benefits from the Nonprofit Sector. Chicago: University of Chicago Press.

Clotfelter, C. T. (2007). Federal Tax Policy and Charitable Giving. Chicago: University of Chicago Press.

Clotfelter, C. T., & Steuerle, C. E. (1981). Charitable contributions. In Aaron, HJ and Pechman, JA (Eds.), How Taxes Affect Economic Behavior, Washington, DC: The Brookings Institution, 404-37

Curtin, R. T., Juster, T., & Morgan, J. N. (1989). Survey estimates of wealth: An assessment of quality. In The Measurement of Saving, Investment, and Wealth (473-552). Chicago: University of Chicago Press.

Glazer, A. and Konrad, K. 1996. A Signaling Explanation for Charity. American Economic Review 86:1019-28.

Gouskova, E., Andreski, P., & Schoeni, R. F. (2010). Comparing estimates of family income in the Panel Study of Income Dynamics and the March Current Population Survey, 1968-2007. Survey Research Center, Institute for Social Research, University of Michigan.

Harbaugh, W. (1998). “The Prestige Motive for Making Charitable Transfers.” American Economic Review, Papers and Proceedings 88:277-282.

James, R. N., & Sharpe, D. L. (2007). The nature and causes of the U-shaped charitable giving profile. Nonprofit and Voluntary Sector Quarterly, 36(2), 218-238.

Jencks, C. (1987). Who gives to what? In W.W. Powell, The Nonprofit Sector: A Research Handbook (1st ed.). New Haven: Yale University Press, 321-339.

Li, G., Schoeni, R., Danziger, S., & Charles, K. (2010). New Expenditure Data in the Panel Study of Income Dynamics: Comparisons with the Consumer Expenditure Survey Data. Monthly Labor Review, 29-39.

Lunde, P. (2002). Islam. New York: Dorling Kindersley Ltd.

McClelland, R., & Brooks, A. C. (2004). What is the real relationship between income and charitable giving? Public Finance Review, 32(5), 483-497.

12

Meyer, B. D., & Sullivan, J. X. (2003). Measuring the well-being of the poor using income and consumption (No. w9760). National Bureau of Economic Research.

Mulgan, G. (2007, October 23). Technology and globalisation have the power to transform communities. The Guardian. Retrieved from http://www.theguardian.com/society/2007/oct/24/communities.guardiansocietysupplement

New American Standard Bible. (1960). La Habra, California: The Lockman Foundation.

Ostrower, F. (1995). Why the wealthy give: The culture of elite philanthropy. Princeton, NJ: Princeton University Press.

Piff, P. K., Kraus, M. W., Côté, S., Cheng, B. H., & Keltner, D. (2010). Having less, giving more: the influence of social class on prosocial behavior. Journal of Personality and Social Psychology, 99(5), 771.

Posner, Raphael, Haim Hillel Ben-Sasson, and Isaac Levitats. “Charity.” Encyclopaedia Judaica. Ed. Michael Berenbaum and Fred Skolnik. 2nd ed. Vol. 4. Detroit: Macmillan Reference USA, 2007. 569-575. Gale Virtual Reference Library. Web. 4 July 2014. http://go.galegroup.com/ps/i.do?id=GALE%7CCX2587504163&v=2.1&u=imcpl1111&it=r&p=GVRL&sw=w&asid=2889e5651cd497cfb55d27fb220abf03

Robbins, K. C. (2006). The Nonprofit Sector in Historical Perspective: Traditions of Philanthropy in the West. In The Nonprofit Sector: A Research Handbook. Powell, W.W. and Steinberg, R., Eds. New Haven, CT: Yale University Press.

Schervish, P. G., & Havens, J. J. (1995a). Do the poor pay more: is the U-shaped curve correct? Nonprofit and Voluntary Sector Quarterly, 24(1), 79-90.

Schervish, P. G., & Havens, J. J. (1995b). Explaining the curve in the U-shaped curve. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 6(2), 202-225.

Schervish, P. G., & Havens, J. J. (1998). Money and magnanimity: New findings on the distribution of income, wealth, and philanthropy. Nonprofit Management and Leadership, 8(4), 421-434.

Schervish, P. G., & Havens, J. J. (2001). Wealth and the commonwealth: New findings on wherewithal and philanthropy. Nonprofit and Voluntary Sector Quarterly, 30(1), 5-25.

Snopes. “Willie Sutton.” Accessed July 3, 2014. http://www.snopes.com/quotes/sutton.asp

Toppe, C.M., Kirsch, A.D., & Michel, J. (2001). Giving and Volunteering in the United States. Washington, D.C.: Independent Sector.

13

US Inflation Calculator. Consumer Price Index Data from 1913 to 2014. Updated May 15, 2014. http://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/

Wiepking, P. (2007). The philanthropic poor: In search of explanations for the relative generosity of lower income households. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 18(4), 339-358.

Wilhelm, M. O. (2003). The Distribution of Giving in Six Surveys. Mimeo, IUPUI.

Wilhelm, M. O. (2005). Basic Facts about Charitable Giving from the Center on Philanthropy Panel Study. Working Paper.

Wilhelm, M. O. (2006). New data on charitable giving in the PSID. Economics Letters, 92(1), 26-31.

Wilhelm, M. O. (2007). The quality and comparability of survey data on charitable giving. Nonprofit and Voluntary Sector Quarterly, 36(1), 65-84.

Yörük, Bariş. 2009. How responsive are charitable donors to requests to give? Journal of Public Economics 93:1111-1117.

14

Appendix I: Variable Construction

Selected demographic, wealth and income variables from the Panel Study of Income Dynamics (PSID) were merged into Philanthropy Panel Study (PPS) for each of five waves from 2001-2009. PPS variables were renamed for consistency across years (i.e., year indicators were removed) and all dollar amounts were converted to real 2013 dollars. Note that most survey amount responses are for the prior year, i.e. 2000 in the 2001 wave, etc. The individual year datasets were then appended into a stacked dataset for cross-sectional analysis.

A total giving variable was constructed by summing giving to religious and ten secular causes (ASecular10). The PPS extracts constructed lower bounds for giving amounts when respondents did not know or refused to state exactly how much they gave. If such respondents provided a useful answer to subsequent unfolding bracket questions (of the form “was it less than x and more than y”), their giving amount was assigned to be the lower limit of the bracket. We maintained this and all other donation-variable construction decisions made in the PPS extracts. Ratio variables were constructed for total giving as a percentage of total family income, wealth, and wealth other than home equity, respectively. Similar ratios were constructed for donations to religious causes, secular causes, and ten other types of charitable causes (see Table 1, descriptive statistics). Note that information on donations to six of the charitable causes is available for only four out of five waves of data. The variable for total family income was drawn from the PSID data, since that data has been updated after the PPS extracts were created. We used wealth variables from the PPS to construct the wealth ratios, however, but will revisit that decision in future revisions of this paper. Missing values for each ratio variable were automatically generated when corresponding income or wealth was $0, and negative ratios were generated when income or wealth was less than $0.

We created dummy variables for educational achievement, metropolitan size greater than one million, any children, and bad health. The excluded education category is “less than high school,” dummies for each other category listed in the descriptive statistics were created separately for the household Head and Wife/”Wife” as defined by PSID criteria. Respondents classified their health status and that of their spouse in five categories. The corresponding bad health dummy variables equal 1 if respondent said “poor” or “fair.” We also replaced codes for DK/RF with missing values for working, retired, disabled and African American variables, and created dummy variables for Hispanic Missing (H/W) due to the large number of don’t know/refuse answers to by PSID respondents. Rather than excluding these observations, we include them with Hispanic Missing coded to equal 1.

15

Figures and Tables

Figure 1: Average Ratio of Donations to Income for Selected Income Classes at Four-Year Intervals, 1922-1946

Graph produced by authors with data from Andrews (1950), Table 6, p. 58.

Income Categories (selected by Andrews):

1 $5,000 - $10,000 2 $10,000 - $25,000 3 $50,000 - $100,000 4 $300,000 - $500,000 5 $1,000,000 and over

0

1

2

3

4

5

6

7

8

9

1 2 3 4 5

1922

1926

1930

1934

1938

1942

1946

16

Figure 2: Percentage of Households Making Charitable Gifts

0

10

20

30

40

50

60

70

80

90

100

Percentage of Households Making Charitable Gifts

CES

PSID

CES - Consumer Expenditure Survey, 1998-2001: N=16,442. Analysis: James & Sharpe (2007) PSID - Panel Study of Income Dynamics/ Philanthropic Panel Study, 2001-2009: N=39,252. Analysis: Authors.

17

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0 20 40 60 80 100 120 140

dony

Total Family Income

PSID data using James/Sharpe income categories

All Households Households excluding dony 10%+

Figure 3: Comparison of Percentage of Income Gifted in Each Income Increment 

Source: James & Sharpe (2007)

18

Figure 4: Percentage of Income Gifted in Each Income Increment – More Brackets 

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0 100 200 300 400 500 600 700

dony

Total Family Income

PSID Data using more ranges than JS but not including income <=0

Households excluding dony 10%+ All Households

‐0.2

‐0.15

‐0.1

‐0.05

0

0.05

0.1

0.15

0.2

‐200 ‐100 0 100 200 300 400 500 600 700dony

Total Family Income

PSID Data using more ranges than JS

All Households Households excluding dony 10%+

19

Figure 5: Baseline Residuals vs. Income

20

Figure 6: Average Predicted Generosity, Using Splines

21

Variable Obs Mean Std. Dev. Min Max

Income and Wealth

Total Family Income 23,792         97,195$          125,695$            (128,538)$            6,835,101$            Wealth  23,792         398,805$        1,749,859$        (2,012,953)$         109,000,000$       Wealth other than Home Equity 23,792         285,418$         1,671,933$         (2,055,800)$          109,000,000$        

Family Demographics

Married 23,792         0.61 0.49 0 1

Number of Children 23,792         0.79 1.10 0 9

Age of Youngest 23,792         3.19 5.05 0 17

Any Children 23,792         0.43 0.49 0 1

Big Metro1 23,792         0.43 0.49 0 1

New Head 23,792         4.53 1.28 1 5

Characteristics of Head

Age 23,788         47.38 15.63 17 99

Female 23,792         0.24 0.43 0 1

Health Poor or Fair 23,792         0.12 0.33 0 1

Disabled  23,780         0.02 0.15 0 1

Working  23,780         0.77 0.42 0 1

Retired  23,780         0.14 0.34 0 1

African American 23,593         0.26 0.44 0 1

Hispanic 23,792         0.05 0.22 0 1

High School Grad 23,792         0.29 0.45 0 1

Some College 23,792         0.26 0.44 0 1

College Graduate 23,792         0.18 0.38 0 1

Graduate Education 23,792         0.11 0.32 0 1

Education Missing 23,792         0.05 0.22 0 1

Characteristics of Wife

Age 23,792         29.13 24.22 0 93

Health Poor or Fair 23,792         0.07 0.26 0 1

Disabled  23,784         0.01 0.10 0 1

Working  23,784         0.44 0.50 0 1

Retired  23,784         0.05 0.23 0 1

African American 23,633         0.11 0.31 0 1

Hispanic 23,792         0.34 0.48 0 1

High School Grad 23,792         0.19 0.39 0 1

Some College 23,792         0.17 0.38 0 1

College Graduate 23,792         0.12 0.32 0 1

Graduate Education 23,792         0.07 0.26 0 1

Education Missing 23,792         0.05 0.21 0 1

Giving

Total2  23,792         2,460$             6,434$                 1$                           664,901$                To Religion 23,792         1,562$            3,654$                0 142,439$               To Secular 23,792         899$                4,982$                0 662,872$               To Combined Funds 23,792         244$                1,226$                0 104,040$               

Table 1.  Descriptive Statistics

22

To Education 23,792         111$                1,038$                0 67,640$                 To Health 23,792         116$                4,325$                0 662,872$               To Needy 23,792         241$                907$                   0 33,144$                 To Arts 19,364         30$                  287$                   0 13,872$                 To Environment 19,364         26$                  246$                   0 20,808$                 To International 19,364         24$                  287$                   0 24,664$                 To Neighborhood/ Community 19,364         18$                   178$                    0 12,332$                  To Other 19,364         59$                  593$                   0 53,028$                 To Youth 19,364         41$                  272$                   0 16,230$                 

1Coded as 1 if resides in a metropolitan area with a population of at least 1,000,000.2Sum of giving to religious and secular causes.

23

Table 2: Comparison of Household Income Giving Profile

Income Giving Profile for 16,442 Households (1998-2001 Consumer Expenditure Survey) Source: James and Sharpe (2007), Table 1 After Tax Income

% of Income Gifted

% of Income Gifted (Nonreligious)

% of Income Gifted (Religious)

% of Sample % of Donations

Less than $10,000

4.55 1.28 3.27 12.50 4.10

$10,000-$19,999 2.37 0.57 1.81 18.40 8.40 $20,000-$29,999 2.14 0.65 1.49 15.00 10.40 $30,000-$39,999 1.59 0.26 1.32 12.70 9.10 $40,000-$49,999 1.66 0.44 1.22 9.40 9.10 $50,000-$59,999 1.36 0.30 1.05 8.00 7.80 $60,000-$69,999 1.44 0.30 1.13 6.10 7.30 $70,000-$79,999 1.71 0.44 1.27 4.60 7.70 $80,000-$89,999 1.46 0.41 1.06 3.40 5.50 $90,000-$99,999 1.34 0.40 0.94 2.70 4.50 $100,000-$149,999

1.51 0.52 0.99 4.90 11.30

$150,000+ 2.17 0.92 1.25 2.30 14.80

Income Giving Profile for 39,080 Households (2001-2009 Panel Study of Income Dynamics) Note: Total Family Income includes labor, transfer, business, asset, and Social Security income for head, wife, and other family unit members before taxes. Total Family Income

% of Income Gifted

% of Income Gifted (Nonreligious)

% of Income Gifted (Religious)

% of Sample % of Donations

Less than $10,000

13.36 4.61 8.76 6.45 0.91

$10,000-$19,999 1.92 0.59 1.34 9.53 1.87 $20,000-$29,999 1.89 0.64 1.25 10.00 3.18 $30,000-$39,999 2.03 0.68 1.35 9.97 4.71 $40,000-$49,999 1.80 0.54 1.26 9.43 5.14 $50,000-$59,999 1.86 0.53 1.33 8.07 5.54 $60,000-$69,999 1.80 0.52 1.28 7.18 5.60 $70,000-$79,999 1.90 0.58 1.32 6.06 5.77 $80,000-$89,999 1.96 0.57 1.39 5.52 6.15 $90,000-$99,999 1.95 0.58 1.37 4.49 5.58 $100,000-$149,999

2.14 0.66 1.48 13.25 23.07

$150,000+ 2.01 0.91 1.10 10.04 32.50

24

Table 3: Comparison of Households Making Charitable Gifts

Households Making Charitable Gifts (1998-2001 Consumer Expenditure Survey) Source: James and Sharpe (2007), Table 5 Household Income

Percentage of Households Making Any Charitable Gift

Percentage of All Households Giving 10% or More in Charitable Gifts

Percentage of Donor Households Giving 10% or More in Charitable Gifts

Percentage of Income Gifted (Overall)

Percentage of Income Gifted (Excluding 10% or More Givers)

Less than $10,000

34 11.56 34.39 4.55 0.85

$10,000-$19,999 39 6.40 16.44 2.37 0.93 $20,000-$29,999 45 4.83 10.82 2.14 0.92 $30,000-$39,999 49 4.25 8.65 1.59 0.98 $40,000-$49,999 56 3.61 6.50 1.66 1.00 $50,000-$59,999 58 2.58 4.47 1.36 0.98 $60,000-$69,999 60 2.31 3.83 1.44 1.06 $70,000-$79,999 65 3.03 4.66 1.71 1.01 $80,000-$89,999 68 2.86 4.20 1.46 1.08 $90,000-$99,999 67 2.02 3.03 1.34 1.05 $100,000-$149,999 68 2.86 4.23 1.51 1.03 $150,000+ 75 2.97 3.97 2.17 1.22 All 50 5.08 10.16 1.75 1.03 N 16,442 16,442 8,215 16,442 15,607 Households Making Charitable Gifts (2001-2009 Panel Study of Income Dynamics) Note: Total Family Income includes labor, transfer, business, asset, and Social Security income for head, wife, and other family unit members before taxes. Total Family Income

Percentage of Households Making Any Charitable Gift

Percentage of All Households Giving 10% or More in Charitable Gifts

Percentage of Donor Households Giving 10% or More in Charitable Gifts

Percentage of Income Gifted (Overall)

Percentage of Income Gifted (Excluding 10% or More Givers)

Less than $10,000

23.66 14.26 60.27 13.36 0.38

$10,000-$19,999 35.20 4.94 14.05 1.92 0.87 $20,000-$29,999 42.38 4.38 10.34 1.89 0.92 $30,000-$39,999 49.59 4.65 9.38 2.03 1.04 $40,000-$49,999 55.47 4.24 7.16 1.80 1.13 $50,000-$59,999 62.23 4.20 6.74 1.86 1.28 $60,000-$69,999 65.74 4.08 6.21 1.80 1.27 $70,000-$79,999 70.49 3.28 4.65 1.90 1.40 $80,000-$89,999 74.11 3.28 4.42 1.96 1.55 $90,000-$99,999 78.74 4.08 5.18 1.95 1.44 $100,000-$149,999 85.35 3.58 4.19 2.14 1.67 $150,000+ 92.08 2.44 2.65 2.01 1.62 All 61.49 4.61 7.49 2.64 1.23 N 39,252 39,252 24,137 39,252 37,444

25

After‐Tax Income

Committed Donor Households: Liquid 

Assets*

Other Households: Liquid Assets*

Committed Donor Households: 

Percentage Married

Other Households: Percentage Married

Less than $10,000 132,647                    13,559                        0 0 1.9 :1

$10,000‐$19,999 120,554                    22,128                        0 0 1.7 :1

$20,000‐$29,999 845,775                    39,195                        0 0 1.3 :1

$30,000‐$39,999 410,219                    48,375                        0 0 1.5 :1

$40,000‐$49,999 203,691                    74,524                        0 0 1.4 :1

$50,000‐$59,999 171,123                    98,341                        0 0 1.3 :1

$60,000‐$69,999 370,294                    82,305                        0 0 1.1 :1

$79,000‐$79,999 732,889                    123,726                      0 0 1.1 :1

$80,000‐$89,999 296,288                    135,528                      0 0 1.1 :1

$90,000‐$99,999 570,714                    165,844                      0 0 1.1 :1

$100,000‐$149,999 719,481                    255,019                      0 0 1.1 :1

$150,000+ 1,703,711                 874,605                      0 0 1.1 :1

Overall 444,865                    179,250                      51 51 1.0 :1

N 1,808                        37,444                        1,808                        37,444                  

Table 4. Comparing Committed Donor Households (Giving 10% or More of After‐Tax Income to Charity)

Ratio of % Married Committed Donors to % 

Married Other Households

*Calculated as total household wealth

26

Income Level Mean s.d. n Mean s.d. n Mean s.d. n Mean s.d. n.

<$10,0002 57.0% 4.09 553 84.7% 5.09 353 42.3% 3.71 522 364.4% 8.48 26

$10,000‐19,999 5.6% 0.11 1283 6.2% 0.12 947 5.2% 0.08 1236 16.7% 0.35 47

$20,000‐29,999 4.6% 0.15 1626 5.0% 0.17 1301 3.7% 0.05 1535 19.6% 0.58 91

$30,000‐$39,999 4.2% 0.12 1898 4.6% 0.14 1507 3.7% 0.08 1778 11.9% 0.38 120

$40,000‐49,999 3.3% 0.06 2025 3.5% 0.06 1672 3.0% 0.05 1876 6.6% 0.12 149

$50,000‐59,999 3.0% 0.05 1947 3.1% 0.05 1701 2.9% 0.04 1766 4.5% 0.06 181

$60,000‐69,999 2.8% 0.04 1826 2.9% 0.04 1590 2.6% 0.04 1667 4.9% 0.06 159

$70,000‐79,999 2.8% 0.05 1639 2.9% 0.06 1444 2.5% 0.03 1472 5.4% 0.14 167

$80,000‐89,999 2.7% 0.04 1588 2.7% 0.04 1438 2.5% 0.03 1422 4.5% 0.05 166

$90,000‐99,999 2.5% 0.04 1380 2.6% 0.04 1246 2.3% 0.03 1223 3.8% 0.05 157

$100,000‐119,999 2.6% 0.05 2193 2.7% 0.05 2037 2.4% 0.03 1892 3.9% 0.09 301$120,000‐139,999 2.4% 0.04 1628 2.4% 0.04 1560 2.3% 0.03 1335 3.1% 0.05 293

$140,000‐159,999 2.4% 0.03 1085 2.4% 0.03 1045 2.1% 0.03 823 3.2% 0.04 262

$160,000‐179,999 2.2% 0.03 788 2.2% 0.03 757 1.9% 0.03 541 2.7% 0.03 247

$180,000‐199,999 2.3% 0.03 530 2.3% 0.03 517 2.2% 0.03 354 2.3% 0.03 176

$200,000‐249,999 2.5% 0.12 762 2.6% 0.12 743 2.0% 0.03 423 3.3% 0.18 339

$250,000‐299,999 1.9% 0.02 362 1.9% 0.02 357 1.4% 0.02 154 2.3% 0.03 208

$300,000‐349,999 2.1% 0.03 206 2.1% 0.03 203 1.4% 0.02 76 2.5% 0.04 130

$350,000‐399,999 1.9% 0.03 123 1.9% 0.03 121 1.8% 0.04 36 1.9% 0.02 87

$400,000‐449,999 1.5% 0.02 66 1.5% 0.02 66 1.5% 0.02 17 1.5% 0.02 49

$450,00‐$499,999 1.8% 0.04 52 1.8% 0.04 52 1.9% 0.05 12 1.8% 0.03 40

$500,000+ 1.6% 0.02 207 1.6% 0.02 206 0.5% 0.01 42 1.9% 0.03 165

Total 4.3% 0.63 23767 4.5% 0.67 20863 3.9% 0.60 20202 7.0% 0.79 35601All values expressed in 2013 dollars.  2Includes negative income except where specified.  Ratios exclude 172 households with $0 income.

Donations>0

(Top 10% of Wealth)

Table 5. Donations as a Percentage of Total Family Income (2001‐2009 Panel Study of Income Dynamics)1

Donations >0

Donations>0

(Excludies Top 10% of Wealth)

Donations>0

(Excludes Income & Wealth<0)

27

Baseline

Baseline with home 

equity subtracted 

from wealth

Omitting those with 

Negative Income or 

Wealth

Total Family Income ‐0.0341** ‐0.0324** ‐0.0355**

(per $100,000) (0.0109) (0.0101) (0.0115)

Total Family Income2 0.000581** 0.000561** 0.000610**

(per $100,000) (0.000195) (0.000189) (0.000210)

Average Marginal Effect ‐0.0330** ‐0.0313*** ‐0.0343**

Income (per $100K) (0.0105) ‐0.00974 (0.0111)

Wealth 0.0255* 0.0244* 0.0257*

(per $1M) (0.0129) (0.0125) (0.0130)

Wealth2 ‐0.000262 ‐0.000250 ‐0.000263(per $1M) (0.000136) (0.000132) (0.000137)

Average Marginal Effect 0.0253* 0.0243* 0.0255*

Wealth (per $1M) (0.0105) ‐0.0124 (0.0129)

Any Kids ‐0.0126* ‐0.0126* ‐0.0148*(0.0051) (0.0051) (0.0061)

Hispanic H ‐0.0142* ‐0.0145* ‐0.014(0.0065) (0.0065) (0.0076)

College Degree H 0.0210* 0.0221* 0.0233*

(0.0088) (0.0090) (0.0102)

Income level at minimum $2,938,876*** $2,885,432*** $2,912,124***

of estimated U (365,883) (381,297) (367,408)

R20.0039 0.0039 0.0042

N 23474 23474 20614

Notes:

   Additional control variables, not displayed, listed in appendix.    All values expressed in 2013 dollars.  

Table 6. Baseline Generosity Estimates and Variations

   Standard errors in parentheses   * p<0.05, **p<0.01, *** p<0.001

28

2001‐2009 2001 2003 2005 2007 2009Total Family Income ‐0.0341** ‐0.0534 ‐0.0212** ‐0.0191*** ‐0.0747 ‐0.0382*(per $100,000) (0.0109) (0.0342) (0.00662) (0.00522) (0.0408) (0.0190)

Total Family Income2

0.000581** 0.0025 0.000455** 0.000416*** 0.00155* 0.000545*(per $100,000) (0.000195) (0.00198) (0.000169) (0.000110) (0.000781) (0.000278)

Average Marginal Effect ‐0.0330** ‐0.0483067 ‐0.0203*** ‐0.0183*** ‐0.0716 ‐0.0372*Income (per $100K) (0.0105) (0.0304) (0.0063) (0.0051) (0.0394) (0.0184)

Wealth 0.0255* 0.0256 0.0115* 0.0184 0.0748 0.0260(per $1M) (0.0129) (0.0159) (0.00549) (0.0114) (0.0559) (0.0139)

Wealth2 ‐0.000262 ‐0.000420 ‐0.000200* ‐0.000326 ‐0.00133 ‐0.000236(per $1M) (0.000136) (0.000255) (0.0000997) (0.000190) (0.00102) (0.000129)

Average Marginal Effect 0.0253* .0253 0.0114* 0.0181 0.0736 0.0258

Wealth (per $1M) (0.0105) (.0157) (0.0054) (0.0112) (0.0055) (0.0138)

Income level at minimum $2,938,876*** $1,066,409*** $2,325,112*** $2,294,930*** $2,412395*** $3,509,683***

of estimated U (365,883) (295,592) (366,597) (514,060) (470,422) (189,036)

N 23474 4337 4625 4788 4794 4930

R2

0.0040 0.0063 0.0350 0.0570 0.0225 0.0086

   Standard errors in parentheses

   Control variables, not displayed, listed in appendix.   All values expressed in 2013 dollars.     Includes negative income.  Ratios exclude 172 households with $0 income.

   Standard errors are robust, clustered on family id

Notes:                                                                                                                                                                                             

   * p<0.05, **p<0.01, ***p<0.001

Table 7. Baseline Generosity by Year

29

All Donations Religious All Secular Education Health Needy

Total Family Income ‐0.0344** ‐0.0228** ‐0.0115* ‐0.00196 ‐0.000375 ‐0.00497(per $100,000) (0.0110) (0.00796) (0.00448) (0.00146) (0.000293) (0.00329)

Total Family Income2

0.000586** 0.000396** 0.000190* 0.0000271 0.00000314 0.000092

(per $100,000) (0.000198) (0.000147) (0.0000810) (0.0000200) (0.00000572) (0.0000643)

Average Marginal Effect ‐0.0332** ‐0.0221** ‐0.0112** ‐0.00191 ‐0.000369 ‐0.00479Income (per $100K) (0.0106) (0.00769) (0.00435) (0.00142) (0.000282) (0.00316)

Wealth 0.0256* 0.0159 0.00971* 0.00271 0.000943* 0.00253

(per $1M) (0.0129) (0.00943) (0.00431) (0.00203) (0.000482) (0.00179)

Wealth2 ‐0.000262 ‐0.000159 ‐0.000103* ‐0.0000281 ‐0.0000103* ‐0.0000271

(per $1M) (0.000136) (0.0000943) (0.0000467) (0.0000215) (0.00000524) (0.0000191)

Average Marginal Effect 0.0254* 0.0157 0.00963* 0.00268 0.000934* 0.00250

Wealth (per $1M) (0.0128) (0.00896) (0.00431) (0.00202) (0.000477) (0.00177)

Income level at minimum $2,932,408*** $2,885,491*** $3,029,984*** $3,620,203*** $5,972,572 $2,699,608***

of estimated U (366,147) (381,463) (365063) (227,054) (6,864,467) (344,126

N 23474 23474 23474 23474 23474 23474

R2 0.0039 0.0030 0.0036 0.0116 0.0064 0.0015

Table 8.  Baseline Generosity Estimates by Recipient Categories

30

Arts

Combined 

Funds Environment International

Neighborhood/ 

Community Other

Total Family Income ‐0.000460* ‐0.00148*** ‐0.000334 ‐0.000102** ‐0.0000759** ‐0.00181(per $100,000) (0.000180) (0.000401) (0.000195) (0.0000376) (0.0000244) (0.00134)

Total Family Income2

0.00000744* 0.0000248** 0.00000592 0.00000169* 0.00000132* 0.0000275

(per $100,000) (0.00000314) 0.00000842) (0.00000380) (0.000000726) 0.00000053 (0.0000195)

Average Marginal Effect ‐0.000445** ‐0.00143*** ‐0.000322 ‐0.0000988** ‐0.0000734** ‐0.00175Income (per $100K) (0.000174) (0.000386) 0.000188 (0.0000363) (0.0000234) (0.00130)

Wealth 0.000328 0.00106*** 0.000116* 0.0000484* 0.0000270* 0.00166

(per $1M) (0.000187) (0.000298) (0.0000548) (0.0000234) (0.0000118) (0.00147)

Wealth2 ‐0.00000344 ‐0.0000109*** ‐0.00000122* ‐0.00000046* ‐0.0000003* ‐0.0000174

(per $1M) (0.00000192) (0.00000322) (0.00000055) (0.00000020) (0.0000001) (0.0000153)

Average Marginal Effect 0.000325 0.00105*** 0.000115* 0.0000480* 0.0000268* 0.00165

Wealth (per $1M) 0.000185 (0.000295) (0.0000529) (0.0000235) (0.0000117) (0.00147)

Income level at minimum $3,089,833*** $2,975,761*** $2,820,725*** $3,028,119*** $2,867,123*** $3,284,304***

of estimated U (367,440) (373,027) (359,004) (405,686) (450,320) (318,151)

N 19137 23474 19137 19137 19137 19137

R20.0066 0.0044 0.0041 0.004 0.0037 0.0055

Control variables, not displayed, as listed in appendix.All values expressed in 2013 dollars.  Includes negative income.  Ratios exclude 172 households with $0 income.

Standard errors in parentheses* p<0.05, **p<0.01, *** p<0.001

Table 8. (continued)

31

Head Single 

and Male

Head Single 

and Female

Head Married Head 

Hispanica

Head Not 

Hispanica

Head African 

American

Head Not 

African 

Head Retired Head Not 

Retired

Total Family Income ‐0.130 ‐0.0806*** ‐0.0289* ‐0.0193*** ‐0.0356** ‐0.314 ‐0.0274** ‐0.288* ‐0.0193**

(per $100,000) (0.0756) (0.0137) (0.0125) (0.00583) (0.0117) (0.204) (0.0102) (0.122) (0.00663)

Total Family Income2 0.0102 0.00980*** 0.000485* 0.00162** 0.000604** 0.0614 0.0444** 0.0220 0.000357*

(per $100,000) (0.00689) (0.00227) (0.000208) (0.000582) (0.000208) (0.0412) (0.0158) (0.0115) (0.000147)

Average Marginal Effect ‐0.115 ‐0.0709*** ‐0.0278* ‐0.0167*** ‐0.0344** ‐0.235 ‐0.0265** ‐0.260* ‐0.0185**

Income (per $100K) (0.0664) (0.0118) (0.0120) (0.00495) (0.0113) (0.151) (0.00987) (0.110) (0.00635)

Wealth 0.0887 0.00164** 0.00219 0.000650 0.0266* 0.0150 0.0223 0.0999 0.00905*

(per $1M) (0.0566) (0.000601) (0.00148) (0.00193) (0.0135) (0.0107) (0.0133) (0.0614) (0.00364)

Wealth2 ‐0.00254 ‐0.000257* ‐0.000219 ‐0.00000194 ‐0.000272 0.0137 ‐0.000229 ‐0.000917 ‐0.0000893(per $1M) (0.00472) (0.000104) (0.000152) (0.0000685) (0.000142) (0.00932) (0.000140 (0.000561) (0.0000459)

Average Marginal Effect 0.0874 0.0163** 0.0217 0.000649 0.0264* 0.147 0.0221 0.0986 0.00899*

Wealth (per $1M) (0.0547) (0.00597) (0.0146) (0.00190) (0.0134) (0.105) (0.0131) (0.0607) (0.00361)

Income level at minimum $637,885*** $411,253*** $2,983,891*** $594,993*** $2,949,554*** $256,128*** $3,090,725*** $653,395*** $2,702556***

of estimated U (144,591) (47,629) (393,174) (57,406) (361,521) (24,091) (345,110) (178,535) (354,819)

N 3364 5667 14443 1173 21565 6046 17428 3239 20235

Mean Total Donations $1562 $1478 $3066 $1362 $2557 $2081 $2601 $2772 $2418

R20.0135 0.0301 0.0037 0.0954 0.0041 0.0082 0.0128 0.0435 0.0024

Notes

   Control variables, not displayed, listed in appendix.   All values expressed in 2013 dollars.     Includes negative income.  Excludes 172 households with $0 income.   a 736 households did not answer the question about head's hispanicity.  They are included in our overall sample,

 but not in either column here.

   Standard errors in parentheses   * p<0.05, **p<0.01, *** p<0.001

Table 9. Baseline Estimates, Sample Splits

32

Donations as a 

Percentage of 

Total Family 

Income

Donations as a 

Percentage of 

Wealth 

Donations as a 

Percentage of 

Wealth other than 

Home Equity

Total Family Income ‐0.0344** ‐0.138* ‐0.196*(per $100,000) (0.0110) (0.0689) (0.0792)

Total Family Income2 0.000586** 0.00283 0.00388*

(per $100,000) (0.000198) (0.00154) (0.00174)

Average Marginal Effect ‐0.0332** ‐0.132* ‐0.189*Income (per $100K) (0.0106) (0.0660) (0.0759)

Wealth 0.0256* ‐0.0522 ‐0.0346(per $1M) (0.0129) (0.0285) (0.0205)

Wealth2 ‐0.000262 0.000650 0.000455

(per $1M) (0.000136) (0.000353) (0.000251)

Average Marginal Effect 0.0254* ‐0.0517 ‐0.0343Wealth (per $1M) (0.0128) (0.0283) (0.0204)

Income/wealth level at $2,932,408*** $40,200,000*** $38,000,000***

minimum of estimated U (366,147) (5,677,999) (6,810,616)

N 23474 23153 23037

R2 0.0039 0.0036 0.0033

Notes:

   * p<0.05, **p<0.01, *** p<0.001   Regression run on all control variables listed in appendix.   All values expressed in 2013 dollars.     Includes negative income and wealth.  468 households are excluded from the last two columns       because wealth was $0, but households with zero income are not excluded here.

   Standard errors in parentheses

Table 10. Generosity Measured as Share of Wealth Donated

33