Red vs. Blue: Charitable Giving

The widely-reported "Generosity Index" that purports to show that poor red states are the most generous is easily shown to be a very flawed measure.  Better measures indicate that blue states are somewhat more generous than red, but the story is complex.

Normally, I'd not want to tackle this topic, because there is no simple answer. However, since such a fuss has been made over The Catalogue for Philanthropy's Generosity Index, I figured that a little research was in order.

To my knowledge, there are two major works on this topics: the notorious Generosity Index, and  Geography and Generosity: Boston and Beyond.  The Generosity Index has received a lot of attention because it purports to show that Red States are way more generous than Blue States; here are its results:

This is pretty dramatic stuff: all those red states on top, all those blue states on the bottom.  However, the Generosity Index badly flawed.  I could go into the more theoretical reasons as to why - bad assumptions, flawed manipulations of numbers - but rather than dry theory, let's look at two simple yet powerful examples that demonstrate its  inadequacies:

1. The most glaring problem is pointed out by the Geography and Generosity study: in the 2004 Generosity Index, my own state of Massachusetts ranked 49th of 50 states  - pretty bad!  According to the Generosity Index study, the average Massachusetts tax return showed an charitable contributions of $2,928.  Let's suppose, however, that the average Massachusetts charitable contribution went from $2,928 to $1,000,000.  Even if every single Massachusetts tax return represented a cool million dollars in charitable giving, Massachusetts would only move from 49th to 23rd on the Index (go to the report and try it!) - although, clearly, any correct measure should show it as the most generous state under these circumstances.
2. Members of the LDS Church are pretty good about tithing (donating 10% of their income to the church).  More than 80% of Utah residents are members of the LDS Church.  Therefore, any state ranking based on charitable giving that does not show Utah at the top is suspect, to my mind.  The Genrosity Index ranks Utah as only 9th.

If the Generosity Index is defective, then what is the correct ranking?  In contrast to the Generosity Index, the Geography and Generosity study does a creditable job of analyzing income and giving, using sounder numbers as a basis and adjusting for after-tax income, cost of living, and so forth.  And, lo and behold, it's results do not have the problems pointed out above, if every tax return in Massachusetts had a $1,000,000 deduction for charitable contributions, then Massachusetts would rank as the most charitable state.  And Utah ranks first:

The Geography and Generosity numbers look quite good for the blue states - after Utah, which is a special case, the next six states are blues.  Eight of the botton ten are red states:

However, it would wrong to take these rankings as the gospel truth.  To be a bit technical:

• There's a fair amount of uncertainty built into the methodologies used to get these rankings
• The value  of any given state is pretty close to the values of its neigbors

Based on the uncertainties and tight distribution, it is reasonable to do what the study's authors did: that is, to assign states into four groups, from the most generous to the least generous, rather than ranking each state individually.  A graph showing the results is below in the Data section.  From the graph, it's reasonably clear that blues dominate the more generous categories, while the reds dominate the less generous categories.

[1] Liberality Score for a state is the ratio of the votes received by Kerry to the votes received by Bush in the 2004 Presidential election.  Data from http://uselectionatlas.org/USPRESIDENT/data.php?year=2004&datatype=national&def=1&f=1

[2] from: http://www.catalogueforphilanthropy.org/cfp/db/generosity.php?year=2004 Catalogue for Philanthropy National Generosity Index

[3] from: http://www.tbf.org/uploadedFiles/GenerosityReport_10-30-05.pdf Geography and Generosity: Boston and Beyond, Center on Wealth and Philanthrophy, Boston College: Table 17: Three Measures of Giving Relative to Income by State, 2002