Charitable contributions are procyclical, since they are a normal good. Therefore it is not surprising that they fell during the Depression. That is of course one of the main neoclassical reasons why the welfare state is a good thing. Another is the free-rider effect, which exists even for charitable donors.
At 04:24 15/06/05, Eugene Coyle wrote:
Do they have data showing where the Churches spent all the money they stopped using for charity? Did parishioners stop contributing because they knew the government was taking care of everything? What is their data on parishioners income, in those years, and how much did contributions drop? SOTS. (Is that a regular acronym, like lol, or imo?) Gene michael perelman wrote:"Faith-Based Charity and Crowd Out during the Great Depression" BY: JONATHAN GRUBER Massachusetts Institute of Technology (MIT) Department of Economics National Bureau of Economic Research (NBER) DANIEL M. HUNGERMAN Duke University Department of Economics Document: Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=723301 Paper ID: NBER Working Paper No. W11332 Date: May 2005 Contact: JONATHAN GRUBER Email: Mailto:[EMAIL PROTECTED] Postal: Massachusetts Institute of Technology (MIT) Department of Economics Room E52-355 50 Memorial Drive Cambridge, MA 02142 UNITED STATES Phone: 617-253-8892 Fax: 617-253-1330 Co-Auth: DANIEL M. HUNGERMAN Email: Mailto:[EMAIL PROTECTED] Postal: Duke University Department of Economics Durham, NC 27708-0204 UNITED STATES ABSTRACT: Interest in religious organizations as providers of social services has increased dramatically in recent years. Churches in the U.S. were a crucial provider of social services through the early part of the twentieth century, but their role shrank dramatically with the expansion in government spending under the New Deal. In this paper, we investigate the extent to which the New Deal crowded out church charitable spending in the 1930s. We do so using a new nationwide data set of charitable spending for six large Christian denominations, matched to data on local New Deal spending. We instrument for New Deal spending using measures of the political strength of a state's congressional delegation, and confirm our findings using a different instrument based on institutional constraints on state relief spending. With both instruments we find that higher government spending leads to lower church charitable activity. Crowd-out was small as a share of total New Deal spending (3%), but large as a share of church spending: our estimates suggest that church spending fell by 30% in response to the New Deal, and that government relief spending can explain virtually all of the decline in charitable church activity observed between 1933 and 1939. -- Michael Perelman Economics Department California State University michael at ecst.csuchico.edu Chico, CA 95929 530-898-5321 fax 530-898-5901
Robert Scott Gassler Professor of Economics Vesalius College of the Vrije Universiteit Brussel Pleinlaan 2 B-1050 Brussels Belgium 32.2.629.27.15
