Life Expectancy and the Search for a Bag Lady Effect in Charitable Giving

Abstract

The popular press has speculated on the existence of a “bag lady” effect in which women, irrationally fearful of outliving their resources, become exceptionally frugal with their money. We use panel data from the 2003, 2005, and 2007 waves of the Panel Study of Income Dynamics (PSID) to estimate giving functions for single men and single women born before 1965, looking for evidence of exceptionally frugal behavior. Because the spending decisions of older persons may be influenced by the adequacy of their resources relative to their remaining years of life, we convert stocks of unannuitized wealth to equivalent consumption flows that reflect remaining life expectancy. Controlling for access to resources and demographic characteristics, we find no evidence that women are less likely to give to charitable causes, less generous in their giving, or overrepresented among persons who give much less than predicted.