Monday, October 19, 2009

Donating money to church during the recession

A recent USA Today/Gallop poll finds that, relative to twelve months ago, the number of American donating money to churches has not changed and the number of Americans volunteering at churches has increased.

This second finding is intuitive: if people out of work have a lower opportunity cost of time, they may devote it to religious volunteering. The article does not specify what type of volunteering is done, and that would be informative. Perhaps some volunteering may also serve indirectly to help networking for job opportunities.

The first finding may seem counter intuitive, but later in the article you read that people are donating less money rather than not donating at all. If incomes take hit, this is not surprising. The benefits associated with religious giving may not have changed dramatically during the recession, but the cost of giving up part of your now lower income may be higher than before. People reduce the amounts they give but not down to nothing.

Seems like our simple economics logic does pretty well explaining this pattern found in the poll.

5 comments:

  1. I found this article's discovery to be true in my case as well. Even after my father was laid off, my family continued to donate money to churches. The lost of his income did not affect how many times we donated but on how much. In an economic approach, people continue to donate because they believe that the benefits of religious giving outweigh the costs. A reason why some people may donate is because they feel that it makes them better Christians. For example, the money which they donate goes to helping others in need such as the poor or less fortunate. I thought the article's finding was an example of inelastic demand. Although the recession makes it harder for Americans to donate to churches,people are still donating because the demand for religious goods, such as salvation, is inelastic. It also shows that religion is prospering in the U.S.A even during a time of recession.

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  2. Sam White

    I believe this article is very true in the sense that many people, specifically the younger generation, will always continue to do volunteer work for churches because that is the easiest way for young adults to show that they are "caring" and therefore a more well rounded individual for college applications. High school students are more and more worried about getting into the best college and showing the college that they care about others in a way to give their time for a good cause. I was an example as this 4 years ago. I had volunteered at most twice with my church, but felt it a big deal to expand on this in my application. I felt that by not making it a big deal, it might seem as if I am selfish and do not care about others with in fact this is not the case at all. Church volunteering is a strong stance in society and therefore is looked at as a very good thing in virtually every person's eyes. One can not really go wrong by working with a church and volunteering their time in this sense.

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  3. Kendra, Your comment about elasticity seems relevant here. Let me clarify something: the total dollars donated will drop whether the demand is elastic or inelastic (as long as the demand is not perfectly inelastic, which I argued in class is never the case). It is the extent to which the donations drop that determines whether it is elastic or inelastic, and I'm not sure we have enough information to make that judgment here.

    Sam, Interesting point about how high school students' willingness to volunteer time is related to the secular desire to get into a good college. But is this related to the recession? According to your logic, high school students would be volunteering in anticipation of going to college and not because of bad economic times. Do you see how the students' volunteering for this secular reason might be affected by the recession? I see one possible connection...

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  4. Jia Hui Huang

    Most people would think donations would decrease during the recession especially economists. As people have lesser income, they would have less money to spend it elsewhere such as donations and charity or on other things not needed. During the recession, these people will still donate some money but not absolutely nothing even with a lower income because they believe that the supernatural being will help them.

    Because of the recession, there is an increase in the amount of people that are poor, unemployed, etc. Therefore, the demand for services has increased as these people turn to a supernatural being to find stability in their lives once again. So, the lower opportunity cost of time causes the people to devote more time to religious volunteering because they believe that the supernatural being can help them find a solution to their problems.

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  5. The weak economy and rising unemployment will not keep American's from donating to their religious charities and religious organizations. According to USATODAY and the Gallup poll statistics regarding donations and the weak economy, "the percentage donating money was almost the same 12 months earlier". These religious organizations continue to have a vast impact and continue to strengthen the relationships with their donors.

    I agree with Kendra. Through an economic approach, people will always continue to outweigh the costs of religious giving with the benefits of feeling closer and participating in their faith. Regardless of their economic hardships, people will undoubtedly turn to their faith when times are bad. Although they may only be able to donate less money than before, they feel the need and want to continue to strengthen their religious relationships to get them through the recession.

    What I found intriguing was that even when people were laid off, their amount of free time and religious volunteer work inflated when compared to last year. Despite donating less money, their religious faithfulness continues to outweigh their other costs, and in turn will donate more of their spare time to volunteer in religious activities. Religion is a powerful thing and active parishioners often beleieve and turn to their faith to get them through obstacles in their lives. Nevertheless, this is a mutual benefit in their eyes.

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