The warm glow of giving? Frigid results from US panel data

Abstract

Evaluating the causal impact of charitable donations on subjective wellbeing in the United States reveals that the “warm glow” effect is statistically insignificant within longitudinal survey data. Analysis of the US Panel Study of Income Dynamics from 2009 to 2013 shows that foreign natural disasters are invalid instrumental variables for donations due to their irrelevance and potential endogeneity during the period studied. While life satisfaction data requires fixed-effects modeling to account for interpersonal non-comparability, linear fixed-effects specifications provide a robust approximation of the fixed-effects ordered logit model. Non-causal regression results indicate that charitable donations are not a significant predictor of life satisfaction, a finding that contradicts much of the existing experimental and observational literature. This suggests that the relationship between prosocial spending and happiness is less universal than previously hypothesized. Factors such as health, employment status, and marital stability exhibit much stronger associations with wellbeing than financial giving. Consequently, the psychological benefits of altruism appear diminished in the American context, necessitating further research into the external validity of the “warm glow” hypothesis. – AI-generated abstract.