Does government social spending matter? Exploring how income inequality is associated with charitable giving

Abstract

AbstractObjectiveGiven the detrimental consequences of income inequality and the importance of charitable giving in society, the relationship between income inequality and charitable giving has attracted much scholarly attention, but less is known about why and how income inequality is associated with charitable giving. This study intends to explore the role of government social spending in the relationship between income inequality and charitable giving.MethodBuilding upon previous theoretical arguments and empirical studies, I argue that income inequality is negatively related to government social spending, and government social spending is negatively related to charitable giving. Using the U.S. county‐level panel data (2011–2017), this study runs a series of fixed‐effects models.ResultsIt finds there is no significant relationship between income inequality and government social spending as well as between government social spending and charitable giving. However, income inequality has a robustly and significantly negative relationship with charitable giving.ConclusionGovernment social spending does not play a mediating role in the relationship between income inequality and charitable giving, but income inequality actually has a pernicious effect on individual philanthropy.