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Donations Make People Happier: Evidence from the Wenchuan Earthquake

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Shifting from buying stuff to buying experiences, and from spending on yourself to spending on others, can have a dramatic impact on happiness.

(Dunn and Norton 2013)

Abstract

We examine the effect of donation on the happiness of donors using the 2010 wave of the China Family Panel Study. We consider data from the Wenchuan earthquake, which has induced a large amount of donations from all Chinese communities. We use two measures of donation behavior, namely, donations for victims of the Wenchuan earthquake and for general purposes. We address the endogeneity problem using the percentage of donation in the community the respondent lives in as the instrumental variable, conditional on the generosity of other residents toward each other in the same community. We also employ the propensity score matching method to check for the robustness of our results. All results show that donation has a significantly positive effect on happiness. Our study provides new evidence on the relationship between donation and happiness using natural observations, which complement the experimental evidence in the recent literature.

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Notes

  1. However, Stevenson and Wolfers (2008) find contrasting results. Easterlin (2005), Veenhoven and Hagerty (2006), Easterlin et al. (2010), and Sacks, Stevenson, and Wolfers (2012, 2013) continue the debate about the Easterlin paradox.

  2. However, Liu et al. (2013) examine a shorter and recent period of 2003–2010 and report that the happiness of Chinese has improved during this period using the Chinese General Social Survey.

  3. Other explanations include rising aspirations (Easterlin 1995, 2001; Frey and Stutzer 2002a, b; Stutzer 2004; Knight and Gunatilaka 2012), changing reference groups (Easterlin 1974, 1995, 2001; Clark and Oswald 1996; Ferrer-i-Carbonell 2005; Fafchamps and Shilpi 2008; Knight et al. 2009; Knight and Gunatilaka 2010; Knight and Gunatilaka 2011) and deteriorated social safety net (Easterlin et al. 2012).

  4. Pure and impure altruism can affect individuals’ donation behavior and happiness. Pure altruism is usually expressed as one person’s preference for others’ material or psychic benefit, with no expectation of any compensation or benefits, either direct or indirect. Impure altruism, which involves “warm glow” (Andreoni 1989, 1990), indicates that the donor’s preference for giving per se produces a pleasurable feeling. Empirical evidence supports either pure or impure altruism, or both of them. For example, Aknin et al. (2013a) demonstrate that the emotional benefits of spending money on others are evident only when givers are aware of their positive influence on recipients, which suggests the pure altruism motive for donation. By contrast, Crumpler and Grossman (2008) find that warm glow giving exists and motivates a substantial proportion of all giving. Harbaugh et al. (2007) find that pure and impure altruism contribute to charitable donations using neural evidence of reward and self-reported subjective well-being in an fMRI study of charitable giving.

  5. Yip et al. (2007) find that reciprocity and mutual help improve subjective well-being.

  6. Magnitude of Sichuan earthquake revised to 8.0. (2008, May 18). XinhuaNewsAgency. http://www.china.org.cn/environment/news/2008-05/19/content_15326773.htm, last accessed on December 12, 2015.

  7. Magnitude 7.9—Eastern Sichuan, China. (2008, May 12). USGS. http://earthquake.usgs.gov/earthquakes/eqinthenews/2008/us2008ryan/, last accessed on December 12, 2015.

  8. 各地伤亡汇总 [Casualties of the Wenchuan Earthquake] (in Chinese). (2008, July 21). http://news.sina.com.cn/pc/2008-05-13/326/651.html, last accessed on December 12, 2015. And 汶川地震已造成 69,196 人遇难 18,379人失踪_新闻中心_新浪网 [Wenchuan Earthquake has already caused 69,196 fatalities and 18,379 missing] (in Chinese). (2008, July 6). http://news.sina.com.cn/c/2008-07-06/162615881691.shtml, last accessed on December 12, 2015.

  9. Hooker, J. (2008, May 26). Toll Rises in China Quake. New York Times. http://www.nytimes.com/2008/05/26/world/asia/26quake.html, last accessed on December 12, 2015.

  10. Earthquake estimates as high as $1 billion: AIR. (2008, May 14). http://www.businessinsurance.com/apps/pbcs.dll/article?AID=9999200012955, last accessed on December12, 2015.

  11. The 135th announcement of the Ministry of Civil Affairs. (2009, March 20). http://www.mca.gov.cn/article/zwgk/tzl/200903/20090300028395.shtml, last accessed on December 12, 2015.

  12. Hilgers, L. (2008, August 11). Giving in China. http://balkin.blogspot.ca/2008/08/giving-in-china_11.html, last accessed on December 12, 2015.

  13. 国际社会向中国地震灾区提供了四十四亿现金援助 [The International Society had donated 4.4 billion yuan for rescue efforts in Sichuan earthquake area] (in Chinese). (2009, May 11). http://www.chinanews.com/cj/kong/news/2009/05-11/1686035.shtml, last accessed on December 12, 2015.

  14. The survey covered 24 provinces or municipalities. Tibet, Qinghai, Xinjiang, Ningxia, Inner Mongolia, and Hainan were excluded from the sample to reduce costs, but together they make up only 5 % of the population (Xie et al. 2012, p. 14).

  15. The 2012 wave of CFPS does not ask the same question about happiness. Thus, we can only use the 2010 wave.

  16. Although we control for respondents’ opinion on the importance of wealth, the influence of aspiration on happiness may not be fully captured.

  17. Happiness level declines at middle age (with the lowest level at 40–50 years old) and increases again at old age. The average age in the sample is approximately 45, which lies at the middle age stage. This result is consistent with other studies (Kahneman and Krueger 2006; Appleton and Song 2008; Liu and Shang 2012).

  18. We first report the coefficient of ordered probit regressions in column 1 of Tables 5 and 6. The coefficient is positive and significant, indicating the overall positive effect of donation on happiness. We then report in columns 2–6 the marginal effect of donation on the probability that the happiness value reaches each potential outcome (1–5). The mean value of happiness is 3.825 in our sample. Thus, we observe the negative effects of donation on the probability that the happiness value is equal to 1, 2, or 3 in columns 2–4, as well as the positive effects on the probability that the happiness value is equal to 4 or 5 in columns 5 and 6. Thus, these results provide a qualitatively similar conclusion to that of column 1 in Table 2.

  19. We first report the coefficient of the instrumental variable ordered probit regressions in column 7 of Tables 5 and 6. The coefficient is positive and significant, indicating the overall positive effect of donation on happiness. We then report in columns 8–12 the marginal effect of donation on the probability that the happiness value reaches each potential outcome (1–5). The mean value of happiness is 3.825 in our sample. We observe the negative effects of donation on the probability that the happiness value is equal to 1, 2, or 3 in columns 8–10, as well as the positive effects on the probability that the happiness value is equal to 4 or 5 in columns 11 and 12. Thus, these results provide a qualitatively similar conclusion to that of column 2 in Table 2.

  20. If measurement errors of donation behavior are severe and cause attenuation bias in OLS results, then the 2SLS estimate can correct the attenuation bias and report a higher estimate.

  21. A serious problem exists in Chinese Charities for the transparency of the use of donations. According to a survey by the China Charity Information Center, only 30.4 % of the public welfare foundations release annual reports and the ratio of disclosing financial reports is even lower, only 28  % (source: http://news.foundationcenter.org.cn/html/2012-11/56618.html, last accessed on December 12, 2015). At the same time, there seems also little demand from the donors for knowing where their donations go. A survey by Tsinghua University indicated that only 4.7 % of the donors for the Wenchuan earthquake know where their donations go exactly (source: http://news.china.com.cn/2014-04/21/content_32153332.htm, last accessed on December 12, 2015).

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Acknowledgments

We thank the editor and three referees for their helpful comments. Zhiyuan Chen and Qingyan Zheng provide excellent research assistances. This study is sponsored by the Youth Grant for Humanities and Social Sciences Research, Chinese Ministry of Education (Grant No. 14YJC790156).

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Authors and Affiliations

  1. Beijing IQIYI Technology Ltd., Baidu Company, Beijing, China

    Qianping Ren

  2. Department of Public Finance, School of Economics, Wang Yanan Institute for Studies in Economics, and Key Laboratory of Econometrics (Xiamen University), Ministry of Education, Xiamen University, Xiamen, 361005, Fujian Province, China

    Maoliang Ye

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Appendix

Appendix

See Tables 5, 6, 7, and 8.

Table 5 Effect of Wenchuan earthquake donation on happiness (ordered probit and IV ordered probit)
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Table 6 Effect of general donation on happiness (ordered probit and IV ordered probit)
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Table 7 Effect of Wenchuan earthquake donation on happiness (exclusion of sichuan sample)
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Table 8 Effect of Wenchuan earthquake donation on happiness (propensity score matching, exclusion of Sichuan sample)
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Ren, Q., Ye, M. Donations Make People Happier: Evidence from the Wenchuan Earthquake. Soc Indic Res 132, 517–536 (2017). https://doi.org/10.1007/s11205-016-1233-5

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