Media coverage and charitable giving after the 2004 tsunami

Southern Economic Journal, July, 2008 by Philip H. Brown, Jessica H. Minty

1. Introduction

Relief workers have long believed in the causal relationship between media coverage of humanitarian crises and charitable giving to relief agencies. For example, private donations to relief agencies during the early stages of the 1994 Rwandan genocide were sufficient to support approximately one million displaced Rwandans, but after the tribulations of O. J. Simpson and Tanya Harding eclipsed Rwanda in the media, funding for relief activities began to decline. The perception among many aid workers in the camps for Rwandan refugees (including one of the authors) was that the media had turned its back on the crisis, with potentially dire consequences. (1)

While anecdotal evidence abounds, few studies have systematically assessed the relationship between media coverage and the behavior of private donors, and those that do suffer from important analytical shortcomings. For example, an analysis undertaken by the Institute for Philanthropy finds that 14 of 15 surveyed British philanthropists believe that the media has the power to encourage private giving, with 11 of the 15 being inspired to make charitable donations themselves (Breeze 2005). Similarly, Olsen, Carstenson, and Hoyen (2003) find a high correlation between the total number of relevant articles in western newspapers and the total amount of humanitarian assistance allocated to victims of the flooding in Mozambique in 2000 and the cyclone in eastern India in 1999. Unfortunately, neither sample is large enough to make generalizations, nor is there any attempt to quantify the magnitude of the causal relationship. In part, the difficulty in quantifying the relationship stems from disentangling the effect of new developments in stories covered in the media from the pure effect of media coverage. Returning to the Rwanda case, the former is tantamount to asking "What is the combined effect of 10,000 additional deaths and a five-minute news story on donations to U.S. charities?" while the latter is equivalent to asking "Given that 10,000 people were killed, what is the effect of increasing the news story from five minutes to six?"

In this paper we use the December 26, 2004 tsunami as a case study to quantify the causal effect of media coverage on donations to charity. Specifically, we consider the effects of reporting on three nightly network news broadcasts and articles in two prominent newspapers on private donations to seven U.S. relief agencies. To eliminate the time lag between when news reports are seen or read and when donations are received by relief agencies, we focus exclusively on donations made via the Internet. We also control for donor fatigue, tax incentives, and weekends to better isolate the effect of media coverage. Finally, to alleviate simultaneity concerns and omitted variable bias--including new developments in the tsunami story itself--we use announcements of casualties among U.S. military personnel in Iraq to instrument for media coverage of the tsunami. We find that one additional minute of nightly news coverage on network television or one additional 700-word story in major newspapers increases that day's total Internet donations by 16.5-20.8%, controlling for the time that has elapsed since the tsunami struck, tax incentives, and weekends. Using instrumental variables to account for endogeneity concerns reveals that an additional minute of television news coverage raises donations by about 2.5%, an effect that remains large in magnitude and statistically significant. We also find considerable evidence of donor fatigue and evidence that the Tsunami Disaster Aid Tax Relief Act successfully encouraged private giving. These findings are consistent with Andreoni's (1989, 1990) "warm glow" and Sugden's (1984) "commitment" motivations for charitable giving.

The remainder of this paper is organized as follows: Section 2 describes theoretical motivations for charitable giving and provides details about the tsunami disaster and the media coverage that ensued; section 3 describes the data and variables used; section 4 describes the empirical specification and identification; section 5 provides the results of this study; and section 6 concludes.

2. The Tsunami, the Media, and Charitable Giving

Early research into the economics of private giving to charitable organizations classifies the primary motivation for giving as either fostering the provision of public goods or increasing private consumption. The "public goods" model is exemplified by donors who give based on the anticipated private return to some form of public good (Warr 1982; Roberts 1984). By contrast, the "private consumption" model arises when donors derive utility from the act of giving, either because the well-being of others enters their own utility functions or because the public approval of giving benefits the donor (Arrow 1972; Steinberg 1987). For example, conspicuous donations may signal wealth, thereby enabling donors to interact with people in higher socioeconomic strata (Glazer and Konrad 1996). However, donors may also receive a "warm glow" from making charitable contributions (Andreoni 1989, 1990) even when their donations displace those of other donors, when there are no direct social benefits to donors, and when the beneficiaries of charitable giving are far away.