Media coverage and charitable giving after the 2004 tsunami.

• Author: Brown, Philip H.

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.

   Rose-Ackerman (1982, 1996) posits that people only derive utility from charitable programs if they personally donate. Complementary research in this area suggests that the utility gains from donating depend critically on the behavior of others. For example, Duncan (2004) proposes that some donors may engage in "impact philanthropy" in which individuals make charitable gifts only if their donations represent large proportions of the total received by a given charity. At the other extreme, Sugden (1984) suggests that individuals are averse to free riding and hence donate if others in their peer group have also given. In this "commitment" model, individuals believe that they should donate at least as much as others in their reference group.

   Regardless of whether motivated by public goods or private consumption, the majority of American households donate to charities. In 2000, for example, 69% of U.S. households made charitable donations, each donating $1942 on average (Steinberg and Wilhelm 2003). Moreover, both the beneficiaries of charitable giving and the level of donations are influenced by world events, as evidenced by the $2.4 billion in donations made to the victims of the September 11, 2001, terrorist attacks and by the $3.3 billion raised by U.S. charities for disaster relief after Hurricane Katrina. These striking examples of generosity coincided with highly concentrated media coverage in the weeks following the disasters.

   The December 26, 2004 Sumatra-Andaman earthquake that triggered a devastating tsunami provides a similar example. The tsunami spread across the Indian Ocean, inundating coastal communities and claiming victims in Indonesia, Sri Lanka, India, Thailand, Somalia, Myanmar, the Maldives, Malaysia, Tanzania, Seychelles, Bangladesh, South Africa, Yemen, and Kenya. According to United Nations statistics, 229,866 people were either killed or listed as missing (UN Office of the Special Envoy for Tsunami Recovery 2006), rendering the tsunami one of the deadliest natural disasters in modern history.

   The ensuing media response was unprecedented. For example, CNN deployed over 80 anchors, correspondents, and producers to provide 24-hour coverage of relief efforts. Similarly, the tsunami dominated the front page of the New York Times, garnering over half of the articles on the front page in the week following the disaster, and Time, Newsweek, The Economist, and numerous other news magazines featured the tsunami and recovery efforts in multiple cover stories. Indeed, the tsunami dominated worldwide media attention well into January 2005, much longer than any natural disaster in modern history (Wynter 2005). Possible explanations for the high level of media attention include the facts that the tsunami had little competition in the U.S. news during the last week of 2004, that media outlets allocate disproportionately more attention to unanticipated crises than to ongoing troubles, particularly when such crises are easily explained from a scientific perspective (Wynter 2005), and that a number of westerners were killed in the deluge, potentially raising the demand for news (CARMA International 2005).

   Private donations to relief agencies were equally unprecedented. Catholic Relief Services reported that it raised more than $1 million in under three days, a record for the group (Slavin 2004). While Save the Children USA typically receives several hundred thousand dollars in the month following a disaster, the agency received $6 million in donations in the first four days following the tsunami (Strom 2005). Lutheran World Relief raised more money in one week than it typically does in one year (Cooperman and Salmon 2005). An Associated Press poll revealed that 30% of American households had donated to the relief efforts within two weeks of the disaster (El Nasser 2005). All told, U.S. charities received approximately $1.6 billion in private donations for the purposes of tsunami relief (Wallace and Wilhelm 2005).

   At least five phenomena may have encouraged this high level of giving. First, the crisis occurred at a time of year when many Americans celebrate holidays that emphasize compassion and giving, perhaps fostering the "warm glow" associated with charitable giving (Falk 2004). Second, Southeast Asia's beaches have become increasingly familiar to Americans in recent decades because of increasing American tourism to the region (Hall and Page 2000) and because of exposure from Hollywood. (2) Third, tax incentives have been shown to motivate charitable giving (e.g., Clotfelter 1985; Kingma 1989; Slemrod 1989; Greene and McClelland 2001; Auten, Sieg, and Clotfelter 2002)...