Does additional demand for charitable aid increase giving? Evidence from Hurricane Sandy

Abstract

This paper re-opens the discussion of whether new demand for charitable aid generates additional giving or is ultimately a zero-sum game. I employ the exogenous variation in donations provided by Hurricane Sandy and a unique data set from a large crowdfunding platform to analyze giving patterns around the disaster. The study consists of two parts. The first part examines whether a major disaster like Hurricane Sandy increases the altruism budget and if and how donors substitute their donations to the victims of the disaster. The second part focuses on the disaster experience and whether the altruism budget and substitution differ with the proximity to the disaster and resulting damage. The findings indicate that the altruism budget increases in line with earlier studies and that not only victims of Hurricane Sandy, but also victims of other major disasters benefit from this increase at least in the immediate aftermath. The analyses provide no evidence for substitution with similar projects. Giving for victims of Hurricane Sandy and other disasters seems to be slightly more pronounced in affected regions relative to the control group of regions further away.