Sarah Brown (Sheffield)
Preety Srivastava (RMIT)
Karl Taylor (Sheffield)
April 2013

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Philanthropic behaviour has attracted considerable attention in the economics literature.
Recent figures from Giving U.S.A. 2011 estimate total charitable contributions in the U.S. in 2011 at $290.89 billion.
Academic focus on the supply side – role of tax deductibility on donations, price and income elasticity.
Andreoni (2006) provides a comprehensive survey of the influences on charitable donations, with economic factors such as income as well as demographic characteristics playing important roles.

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One area, which has attracted less interest, is the relationship between the donating behaviour of parents and their offspring.
Such a gap contrasts with the considerable interest that intergenerational relationships have attracted in other areas of economics.
Becker (1993): children are heavily influenced by the attitudes & behaviour of their parents, with childhood experiences during the formative early years shaping their preferences.

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Evidence from the social psychology literature based on controlled laboratory experiments cited by indicates that children’s pro-social behaviour increases with the pro-social behaviour of their role models.
Social learning has attracted considerable attention in the social psychology literature, whereby children learn to behave in a pro-social manner by imitating models behaving pro-socially (Lévy-Garboua et al,
2006).

 Cox and Stark (1996, 2005) explore the
‘ demonstration effect ’ whereby parents teach their children the ‘desired’ future behaviour by setting an example themselves.
 They focus on preference shaping in the context of facilitating intergenerational exchange in the provision of care.
 They present empirical evidence consistent with the ‘demonstration effect’.

 Growing related empirical literature exploring intergenerational relationships related to attitudes and behaviours such as trust, risk attitudes and sociability.
 Guiso et al. (2008) model the intergenerational transmission of priors about the trustworthiness of others, whilst Dohmen et al. (2007) explore the intergenerational transmission of trust & risk attitudes using
GSOEP .

 The relationship between the donating behaviour of parents & their offspring remains relatively unexplored from an empirical perspective.
 Wilhelm et al. (2008) estimate the correlation between the generosity of parents and that of their adult children using U.S. PSID .
 Strong positive correlation between the religious donations of parents & their adult children.

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We explore the relationship between the donating behaviour of parents and that of their children aged less than 18, i.e. pre-adulthood.
Our focus on younger individuals reflects the importance of parental influence and guidance during this formative stage of the life cycle.
We exploit information relating to whether or not parents encourage their children to donate to charity in order to ascertain how such ‘directives’ influence the intergenerational relationship between parents and their offspring.

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U.S. Panel Study of Income Dynamics ( PSID ).
We focus on data from the 2002 and 2007 Child
Development Supplements (CDS) .
Children were asked: Did you give some of your money last year - if only a few pennies - to a church, synagogue, or another charity that helps people who are not part of your family ?
Parents were asked: Do you ever talk to your child about giving some of (his/her) money - if only a few pennies - to a church, synagogue, or another charity ?

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The main head of family PSID questionnaires include information about total donations to charity over the respective calendar years.
We use the responses to create (1) a binary indicator of whether the parent donates to charity and (2) a measure of the amount donated.
Our matched sample of children and their parents comprises 3,105 observations, where the children are aged between 8 and 17 years old.

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72% of children donate compared to 60% of parents;
70% of parents talk to their child about donating;
45% of the observations are characterised by the parent & the child both donating;
13% reporting that neither the parent nor the child donates.
27% of observations are characterised by the child donating whilst the parent does not donate;
15% where the parent donates & the child does not donate.

Parents
All
Kids donate
Kids don’t donate
Excluding ‘0 donators’:
All
Kids donate
Kids don’t donate
Mean Standard Deviation
2461
2758
1683
6676
6834
6180
4115
4441
3130
8230
8231
8157

Modelling the Probability that the Child donates
 Propensity to donate by the child is modelled as a function of the parent donating:
Y
C
* 
X '
 
Y
P
 
 We then include whether the parent talks to the child about donating plus an interaction term:
Y
C
* 
X '
 
Y
P
 
T
  
Y
P

T
  

 Child characteristics : gender; ethnicity; age; number of siblings; health; number of friends; allowance; volunteering; academic test scores; behaviour (factor analysis).
 Household characteristics : income; wealth; housing tenure; parent’s education; religious denomination; price of donating.

Probit
Parent donates
Talk about donating
Parent donates*talk
ME T-Stat
0.0541 2.74
- -
- -
ME
0.0162
0.1116
0.0304
T-Stat
0.54
4.10
0.88
Probit
Log parental donation
Talk about donating
Log parental donation*talk
ME T-Stat
0.0106 4.10
-
-
-
-
ME
0.0049
0.1081
0.0040
T-Stat
1.16
4.09
0.85

Results from specification 1 – child control variables
Child Characteristics MEs
Gender
Ethnicity
Age
Age squared
1 sibling
-0.0490
-0.0530
-0.0128
0.0004
-0.0261
2+ siblings
Health good/very good
Excellent
Number of friends
Log allowance
0.0491
0.0455
0.0061
0.0155
0.0062
Child volunteers
Letter-word test
Passage comprehension test
Applied problems test
Behaviour (factor analysis)
0.1324
-0.0308
0.0456
0.0189
0.0099
T-stat
2.87
2.24
0.38
0.32
1.51
1.69
1.01
0.13
2.19
1.23
7.66
2.05
2.90
1.30
1.20

 Sample with one observation per child (1,627 observations);
 Clustered at the family level;
Parent donates
Talk about donating
Parent donates*talk
ME
0.0423
0.1535
-0.0474
T-stat
0.90
7.11
4.56

Probit
Log parental donation
Talk about donating
Log parental donation*talk
ME
0.0089
0.1591
-0.0089
T-stat
0.89
6.16
1.86

Robustness: Summary of Univariate Models:
Donations to Religious Causes
Probit
Parent donates religious cause
Talk about donating
Parent donates to religious cause*talk
ME T-stat ME T-stat
0.1151 6.56 0.0953 3.03
-
-
- 0.1068 5.29
- -0.0018 0.05

Probit
Log parental donation
Talk about donating
Log parental donation*talk
ME T-stat ME T-stat
0.0200 7.68 0.0167 3.30
-
-
- 0.1013
- -0.0001
5.08
0.01

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System accounts for the correlation via unobservable individual or household characteristics that may affect both decisions;
The system framework allows for the endogeneity of the parent’s donating behaviour.
Y
P
* 
X '

P P

Z '
 
P
;
Y
C
* 
X '

C C
 
Y
P
 
C

 Extended to include talking to the child about donating and the interaction term:
Y
P
* 
X '

P P

Z '
 
P
;
Y
C
* 
X '

C C
 
Y
P
 
T
  
Y
P

T
  
C

Treatment effects: measures of the effects of the parent donating on the probability that the child donates
ATE = E Y
1
C

Y
C
0
; X
C


1
C

Y
0
| Y
C P

1, X X
P C
, Z 

ATE = E Y
1
C

Y
C
0
; X
C
, T


1
C

Y
0
| Y
C P

1, X X
P C
Z T 


Parent donates
Parent donates
Talk
Parent donates*talk
ATE
0.0300
T-stat
0.32
0.0202
0.1235
0.0296
0.24
6.62
0.88
ATET
0.0296
0.0200
0.1279
0.0274
T-stat
0.34
0.23
6.76
0.86

Treatment effects – probability that the child donates and the amount of parental donations
Log parental donation
Log parental donation
Talk
Log parental donation*talk
ATE
0.0169
0.0127
0.1186
0.0036
T-stat
2.02
1.54
6.34
0.78

 Intergenerational relationships have been established in many areas of economics;
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Findings support a positive correlation between whether the child donates and whether the parent talks to the child about donating;
Such verbal ‘directives’ rather than the parent’s actual donating behaviour appear to be important.