Preach What You Practice? Donating Behaviour of Parents and their Offspring

advertisement

Preach What You Practice? Donating Behaviour of Parents and their Offspring

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

Introduction and Background

    Philanthropic behaviour has attracted considerable attention in the economics literature. Recent figures from billion.

Giving U.S.A. 2011

estimate total charitable contributions in the U.S. in 2011 at $290.89 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.

Introduction and Background

   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.

Introduction and Background

  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).

Introduction and Background

 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’.

Introduction and Background

 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

.

Introduction and Background

 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.

Introduction and Background

   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.

Data

    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

?

Data

   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.

Data: binary donation indicators

      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.

Data: amount of parental donations

Parents

All Kids donate Kids don’t donate

Excluding ‘0 donators’:

All Kids donate Kids don’t donate

Mean

2461 2758 1683

Standard Deviation

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

  

Additional control variables

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.

Summary of Univariate Models

Probit

Parent donates Talk about donating Parent donates*talk

ME

0.0541 - -

T-Stat

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

0.0106 - -

T-Stat

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

Robustness: sibling effects

 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

Robustness: sibling effects

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

0.1151 - -

T-stat

6.56

ME

0.0953 - 0.1068 - -0.0018

T-stat

3.03 5.29 0.05

Summary of Univariate Models: Donations to Religious Causes

Probit

Log parental donation Talk about donating Log parental donation*talk

ME T-stat

0.0200 7.68

ME T-stat

0.0167 3.30 - - - 0.1013 - -0.0001 5.08 0.01

Joint model of child & parent donating

  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

Joint model of child & parent donating

 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

C 1 

Y

C 0 ;

X

C   1 C 

Y

C 0 |

Y

P  1,

X X

P , C ,

Z

 

ATE = E Y

C 1 

Y

C 0 ;

X

C ,

T

  1 C 

Y

C 0 |

Y

P  1,

X X

P , C

T

 

Treatment effects – bivariate probit model

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

Conclusion

 Intergenerational relationships have been established in many areas of economics;   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.

Download