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Wednesday, November 23, 2005

"Generosity Index" Mirrors Red State-Blue State Divide

As we approach Thanksgiving, the Catalogue for Philanthropy has ranked the fifty states on their relative generosity, comparing each state's average itemized charitable deductions with its average adjusted gross income (based on 2003 IRS data).

The 50-state ranking has a decided Red State-Blue State flavor: 28 of the 29 "most generous" states are Red States that voted for President Bush (including all 25 of the "most generous" states), while 17 of the 21 "least generous" states are Blue States that voted for Senator Kerry (including all 7 of the "least generous" states):

Red State Blue State Map of Generosity

Note the eerie similarity with the 2004 presidential election map:

Blue and Red States by Electorial College

Here are the 12 "most generous" and 12 "least generous" states:

Generosity Rank - State

Having Rank

Giving Rank

Rank Relation

1. Mississippi

50

6

44

2. Arkansas

46

5

41

3. South Dakota

44

9

35

4. Oklahoma

42

8

34

5. Tennessee

35

3

32

6. Alabama

38

7

31

7. Louisiana

43

12

31

8. Utah

30

2

28

9. South Carolina

39

13

26

10. West Virginia

48

22

26

11. Idaho

41

20

21

12. Texas

22

4

18

39. Delaware

14

30

- 16

40. Illinois

9

26

- 17

41. Michigan

16

35

- 19

42. Hawaii

24

43

- 19

43. Colorado

10

32

- 22

44, Minnesota

12

36

- 24

45. Connecticut

1

27

- 26

46. Wisconsin

20

46

- 26

47. Rhode Island

15

50

- 35

48. New Jersey

2

38

- 36

49. Massachusetts

3

39

- 36

50. New Hampshire

8

48

- 40

For media reports on the "Generosity Index," see:

For prior Red State-Blue State tax posts, see:

http://taxprof.typepad.com/taxprof_blog/2005/11/generosity_inde.html

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Comments

Yes, but how about throwing the value of social programs per state into the equation and the tax dollars spent on those programs. Many in blue states agree to slightly higher tax rates (or more efficient government) to provide, as a community, for those less fortunate. I would bet dollars to donuts that when the overall picture is presented that the blue states come out well ahead of most red states.

Posted by: bubba | Nov 23, 2005 7:54:28 AM

Bogus stats. Maybe if a real study was done, taking in all forms of "contribution" and aid, including government spending by state on social programs, that result would be interesting and useful. Blue states generally have more progressive tax regimes which their population has agreed to in order to provide such social programs, whereas most red states basically say every man for him or her self. Let's see a study that takes all this into account, then it might mean something.

Posted by: bubba | Nov 23, 2005 7:59:26 AM

This ranking is pretty messed-up - it ranks giving by "average itemized deduction" for those that itemize. Thus ignoring a bunch of zero's (or low #'s).

For example, if a state had only 1 giver and they happened to be bill gates who gave $1 billion away - that state would easily rank #1 despite the fact that the vast majority gave nothing.

In fact, having a state with a lot of givers (rather than a few richer ones) would actually lower the giving index for that state.

Posted by: John Irons | Nov 23, 2005 10:35:13 AM

The Generosity Index does not necessarily tell us anything about the relative generosity of people in different states. The index is based on the behavior of people who itemize. Because of differences in state tax rates, income levels, and housing prices, the fraction who itemize varies a lot across states. In general a higher fraction of people itemize in the "blue" states than in the "red" states. Thus the groups very possibly are not comparable. There may be real differences between the charitable giving behavior of people in different states, but the Generosity Index viewed in isolation is potentially highly misleading.

Posted by: Frank Howland | Nov 23, 2005 2:09:00 PM

How much of the difference is tithing?

Posted by: TexasToast | Nov 24, 2005 9:18:38 AM

I thought the methodology was suspect. I would think that practically every single homeowner in New York and California itemizes. The combination of income taxes, relatively high property tax, and the fact that anyone with a mortgage is likely going to come out over the standard deduction, not itemizing doesn't make sense. Whereas if you are in a low tax state with a $150,000 mortage and a family of four why bother.

Red staters: rejoice that you have lower housing prices, be saddened that you have relatively poorer incomes, but don't think that you are more generous based on this crappy data.

Posted by: Bruce Webb | Nov 24, 2005 11:40:29 AM

Hmm.. so what your saying is that blue states are really the more generous since they have higher taxes to pay for social programs for the poor?

Interesting spin. Who is the more generous, those who give willingly, or those who have no choice and are forced to give thru taxation?

It seems to me more like the red states, since they ARE more generous, do not need to FORCE charity thru taxation, as they willingly give without being forced to by the government... and meanwhile skip the waste associated with adding a whole layer of government expense in the redistribution of the wealth.

As usual.. Libs like to help the needy with YOUR money, then pat themselves on the back for THEIR generosity.

Posted by: Andrew Rose | Nov 25, 2005 12:57:58 PM

Liberals are trying to spin this as them being more generous since they have more social programs for the poor in the blue states, and money given to support those programs is not figured into the "generosity index". They like to point out, also, that the red states also have higher poverty, which they claim proves we care less about the poor.

There are several fallacies in this line of reasoning.

First... it is not generosity if it is forced, thru taxation. Taking from ANY citizen, against his wishes, is theft... no matter how "noble" the use of the money. It is no different than a man sticking a gun in your face and demanding money so that he can give it to "charity" While some in blue states may support all those social programs, I do not think they can come close to saying that everyone who is being taxed for it supports it.

Second, their statement about spending on such programs (which, remember, the citizen has no choice but to give) not being figured into the "generosity index" may be true, but there is another sort of donation which is not calculated into it either.. and that money, raised mostly in red states, is church donations (which IS money freely given). While donations to charities are often itemized on tax statements, almost nobody itemizes the money they drop in the church collection plate. Huge amounts of money are raised in this manner which also go to charitable works, and is not reflected in the "generosity index". Recent studies have also shown that those who reside in the red states are also considerably more devout and regular church goers, so it follows that they end up making far more contributions at the church collection plate.

The third thing they point out.. about how red states have more poor is actually, in this case, a sign of just how much more generous the average citizen in the red states are. The "generosity index" is calculated as a ratio, contributions versus income, and thus it reflects the average taxpayer in the regions. The average taxpayer in the red states IS poorer than in the blue states... and yet they STILL GIVE A HIGHER RATIO OF THEIR INCOME than those in the blue states. In other words, they give more.. even though they are less able to afford it. To me, that does not speak very well for the average citizen in states that have more wealth, the blue ones.

But then, is there really anything revealed by this study that we did not already know?

Posted by: Pericles | Nov 26, 2005 3:11:38 PM

The academic term for this sort of study is "crap" (or "autocorrelation" or something like that). In low-tax, low mortgage states the itemizers will tend to be made up of those who donate, since it's the donations that make these taxpayers eligible to itemize.

Posted by: Gwailo | Nov 26, 2005 10:45:39 PM

What do IRS charitable contributions have to do with charity, anyway? Most tax-deductible contributions go to line the pockets of the service middle class. Okay, so what if the Confederacy's propensity to support the Reverend Billy Bob exceeds the Yankee propensity to support Effete U? Neither has much to do with poor folk.

Posted by: Joe S. | Nov 28, 2005 5:12:15 PM

Everyone (or so I thought) knows the "smartest states" index posted Liz Lanier index was a hoax:
http://www.isteve.com/IQhoax.htm

Posted by: CH | Dec 4, 2005 12:02:04 PM

Here's a major problem with the usual interpretation of this ranking. MUCH of the deductions are weekly tithing to churches and much of this money does not go to the poor, but to heat and cool the church building, pay the pastor, pay insurance and water bills and so forth. Because, the percentage of Americans who regularly attend church is higher in the typical red state, this biases the results. If the "Generosity Index" could be reconstructed to control for tithing deductions and the same patterns emerged, that would mean something.

Posted by: Jared F | Dec 8, 2005 8:26:17 AM

The Generosity Index is a hoax. It is a hoax that has been perpetrated on the American public by media that apparently completely lack journalistic inquisitiveness. There are statistics that give the Index verisimilitude, but it is shocking that there has been practically no consideration of what the numbers actually mean. The treatment of the Generosity Index as a serious matter by the media is no less shocking than any dependence on flawed unnamed sources or forged documents. The exploitation of the Generosity Index for political purposes is even more outrageous and demonstrates a lack of either moral or journalistic integrity. Rush Limbaugh, Michelle Malkin, Andrew Sullivan, Michael Medved, Wesley Pruden, Senator Trent Lott, and Charles W. Dunn (Dean of the Robertson School of Government at Regent University) have all made absurd and unwarranted conclusions from comparing the state rankings derived from the Generosity Index and election results. Either they lack the intellectual wherewithal to realize that the Index is nonsense or they are deliberately engaging in yet another willful distortion of facts. Ms. Malkin in addition appears in her Web posting to engage in plagiarism by not acknowledging that others had presented the graphic correlation of the Index and election results previously.
What is wrong with the Index? In general states with low per capita income and lower levels of education are ranked higher than those with higher income and education level. The Index is based on a statistically suspect combination of rankings based upon state average gross income (AGI) and average itemized charitable contribution deductions (ICD). The data are obtained from the Internal Revenue Service. Some commentators have focused on the fact that only money contributions are included, whereas others have suggested that the higher cost of living in the richer states may contribute to lower levels of monetary charitable contributions. Both of these criticisms miss the point. Average deductible charitable contributions are simply NOT an accurate measure of actual monetary contributions when there are wide variations in the percentage of income-tax filers who itemize contributions. In Connecticut, for example, 40% of filers itemize, whereas in Mississippi only 20% do. This variation results from the fact that charitable contributions are not the only factor that leads to the decision to itemize. Taxpayers in wealthier states will own property with higher values and therefore higher mortgages. They are also more likely to be paying higher deductible state and local taxes (and also receiving greater public services). They are therefore far more likely to itemize their deductions. Consequently, a taxpayer in Connecticut who is only donating $1000 to charity is far more likely to itemize than is a taxpayer from Mississippi. Only those Mississippians who have made larger contributions will find it worthwhile to itemize. Small contributors will be excluded from the Mississippi average, although they are included in the Connecticut average.

Continued at http://www.progressiveindiana.org/node/157

Posted by: David Sanders | Dec 15, 2005 12:12:55 PM

Jared,
So by your way of thinking a person's generosity should not be measured by the heartfelt giving of their hard earned money to a charitable purpose, but by how much of that money actually goes to the needy.
Please tell us exactly what charity that you use that sends 100% of the funds to the needy.
It's obvious that your considerable bias is showing in your flawed analysis of a person's intent when they are donating a portion of their income.

Posted by: JPG | Dec 16, 2005 6:37:08 PM

Look, if you want to believe that Red States are superior to the Blues, go ahead. But don't base it on the Generosity Index. Doing that is stupid.

http://www.samueljohnson.com/blog/archives/0411b.html#12a

Posted by: Frank Lynch | Feb 20, 2006 6:15:07 PM

You fail to note that the "blue states" generally pay higher state income taxes, and provide a greater number, and higher quality, of public services than many of the "red states." Bear in mind that a good portion of the charitable giving going on in the southern states is given to churches who exercise considerable discretion as to whom and where they lavish their pious "charity."

Posted by: K Adams | Dec 12, 2007 10:33:00 AM

This just goes to show that conservatives in the rank and file don't believe government can do better than a private organization. Government is ALWAYS less efficient at what it does.....i.e. social security is wavering...free food stamp vouchers given away by FEMA to people who weren't in any flooding areas in Milwaukee...etc. I don't believe the government should be involved in charitable causes unless it's providing aid to foreign countries that experience devastating disasters. Constitutionally, congress is ONLY supposed to protect and defend our borders and make peace treaties with other countries. Anything beyond that is a waste of tax payers money as congress has proven time and time again. Think how much more we could all give to charitable causes if we didn't have the high income tax rate we have now! I, personally, would have an extra $800 a month to help out my fellow human beings AND reduce my own debt to zero. But the American public is gullible for the most part and lets government get involved in thier personal lives which creates the problems we now have.

Posted by: StormyKnight | Sep 12, 2008 9:11:01 AM

Jared F (Dec 8, 2005 11:26:17 AM),

This is just insane. You compare Mississippi with Connecticut and insist that more people in CT itemize than in MS, and therefore the charitable contributions of MS are underestimated compared to CT. Fair enough.

But what that means is that MS is even better than its ranking, and/or that CT is even worse. Remember that MS is #1, and that CT is #45. The rankings are reinforced by this factor, and and your claim that "The Generosity Index is a hoax" is undermined.

Now, if you wanted to say that there are several factors that make the index not completely reliable, I would agree. Cost of living factors in, as does the amount of charity that actually goes to charity rather than to, say, a million-dollar mansion for the pastor of a church. But this happens on both sides of the aisle (can we say Jeremiah Wright?). And if we are going to discount aid by what percentage reaches the poor, and we are going to offset it by how much we give in taxes for the poor, we need to deduct from the tax "giving" buildings for bureaucracies and salaries for social workers if we deduct church buildings and pastors' salaries. In fairness, we should also deduct a portion of IRS agents' salaries and legislators' salaries. We should also add to the formal donations the food and lodging that people give others personally for free, which is not deductible.

That is a lot of work, and we may not have enough data to do all the corrections necessary, But still, the gross numbers tell us something. And it makes sense. When people sense that the government is taking over the job that used to belong to charity, their incentive to personally give to charity goes down. And conservatives are personally more generous than liberals, on the average.

That doesn't fit the liberal narrative. Sorry. Perhaps the liberal narrative needs some reassessment. More evidence for this is the relative giving habits of Sarah Palin and Joe Bidin, or perhaps Barack Obama, or Bill Clinton. Perhaps this is a parallel to the relative eco-friendliness of the houses of Al Gore and George Bush, or where (public or private) Obama's and Palin's children (since they both still have children in school) go to school. Some people talk the talk, others walk the walk. Conservatives aren't just mean-spirited. Get over it.

BTW, I wasn't able to make your URL work.

Posted by: Paul Giem | Oct 18, 2008 1:14:53 PM