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Track W3-3: ESG in Financial Intermediation
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Presentations | ||
Money to Burn: Wildfire Insurance via Social Networks 1University of Wisconsin - Madison; 2University of Colorado - Boulder Person-to-person charity has grown substantially in recent years, yet little is known about who benefits from it. This paper uses micro data on crowdfunding campaigns after a major wildfire to ask whether donors give according to the comparative need of beneficiaries. Linking to personal financial data and holding losses fixed, we find that beneficiaries with incomes above $150,000 receive 28% more support than beneficiaries with income below $75,000 and are more likely to have a campaign in the first place. We document that high-income beneficiaries possess several network advantages when soliciting crowdfunding. However, a networks mechanism does not fully explain why donors who give to multiple campaigns tend to give larger amounts to higher-income beneficiaries. These findings suggest that crowdfunded private charity may exacerbate income inequalities in the recovery process.
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