1. Do Causes Crowd Each Other Out? Evidence from Tornado Strikes January 2016 Tatyana Deryugina UIUC Business & NBER Ben Marx UIUC Economics

2. Determinants of Charitable Contributions Charitable giving offers a mechanism for redistribution and funding of public goods Economists expect under-provision of charitable donations Growing literature on methods for increasing donations Matching, challenge, or seed grants Gifts to potential donors Information about others’ donations Social pressure

3. Crowd-Out Between Causes Increasing donations to one cause may not affect total giving In the extreme, donations may be funded entirely by reduced consumption, or reduced donations to other causes Important implications for policy

4. This Project Research question: Does the charitable response to a new cause crowd out gifts to other causes? Answer requires exogenous variation in need We exploit variation in deadly storms

5. U.S. Tornadoes in 2010 Tornadoes Rotating columns of air Winds up to 300 miles per hour Especially “Tornado Alley” but occur in all states

6. U.S. Tornadoes in 2010 How does a tornado elsewhere in my state affect my donations?

7. Charitable Crowd-Out Literature Imperfect crowd-out of donations to one cause Andreoni 1989,1998 Andreoni and Payne 2003, 2011 Theoretical importance of crowd-out between causes (Rose- Ackerman 1982,1987) Experimental evidence of complete crowd-out between causes in the lab (Eckel and Harwell, mimeo)

8. Data: Charitable Donations IRS Statistics of Income tax data by ZIP Code Individual income tax returns, 2004-2013 Includes: o Number of returns filed o Amount ($K) of charitable contributions claimed for itemized deductions Varying steps to avoid disclosure of individual information ZIP Codes with few returns Returns accounting for a large percentage of a variable

9. Use of ZIP Code Tax Data Restrict to ZIPs with gifts>0 in all years observed Restrict to stable ZIPs using USPS Postal Bulletins Main outcome: log(contributions/returns)

10. Summary Statistics: ZIP Code Tax Data

11. Data: Tornadoes National Oceanic and Atmospheric Administration's Tornado Database Every known tornado since 1950 Starting and ending coordinates Injuries, fatalities, and estimated damages Years 2004-2013 13,809 tornadoes <10% cause injuries, unconditional mean = 0.94 injuries <5% cause fatalities, unconditional mean = 0.08 deaths We focus on tornadoes causing 10+ injuries

12. State-Level Tornado Statistics

13. Summary Statistics: All Tornadoes

14. Empirical Strategy : log contributions per return in ZIP-year : indicator for tornado in state in year : indicator for tornado in ZIP in year,: ZIP and year fixed effects Standard errors clustered by state

15. Results: Effect of a Tornado on Gifts

17. Heterogeneous Effects by Tornado Intensity Tornadoes vary greatly in intensity Stronger tornadoes create more victims, need Does charity respond more to greater need? 2 analyses: Vary severity cutoff (injuries, fatalities) for inclusion of tornado, sum coefficients on Include all tornadoes, interact dummies with sum of injuries, fatalities, or damages

18. 3-Year Effects by Severity Cutoff

19. Effects on Gifts by Tornado Intensity

21. Ideas for Further Analysis Effects by distance and type of state Mediatiors News coverage (Vanderbilt TV archive) Google trends Test for heterogeneity across ZIP Codes Donating ZIP Code Victims’ ZIP Codes

22. Conclusion Total contributions respond to needs arising from tornadoes Significant increase within state Effect persists for two years after tornado Effect increasing in number of victims Causes do not completely crowd each other out

23. Thank you!

24. U.S. Charitable Giving by Year Hurricane Katrina