Staff publication in the Journal of Economic Psychology

01 Sep 2015

Dr Florian Kohlbacher is an associate professor of marketing at IBSS. Recently Dr Kohlbacher co-authored a paper with Dr Tim Tiefenbach, "Disasters, donations, and tax law changes: Disentangling effects on subjective well-being by exploiting a natural experiment". It has been published in the Journal of Economic Psychology.

This study sets out to investigate whether an increase in donations in the aftermath of disasters can mitigate the negative effects on subjective well-being, and if so whether policy measures, such as tax law changes, can amplify this mitigating effect by providing further incentives for donations.

The two research questions are derived by bringing together different strands of literature on the intertwined relationship between disasters, donations, subjective well-being, and tax subsidies regarding donations.

To analyse these questions, data on the recent, impactful triple disaster on 11 March 2011 in Japan (3–11) was used. Three months after the disaster, a long-planned change in tax law was put into effect that allowed higher tax deductions for charitable donations. Applying a moderated mediation analysis to a unique dataset, the authors are able to disentangle the total rise of donations into positive effects that are caused by the disaster itself and positive effects that are caused by the recent change in the Japanese tax law.

The results of this study show that about 30% of the direct negative effect of 3–11 on subjective well-being is mediated and mitigated by donations.The change in taxation law could have further mitigated the negative subjective well-being effects of 3–11, if more people had been aware of it. However, since a large majority of the Japanese public had not even been aware of the tax law change, potential mitigating effects by increased donations have not been realised. As for policy implications, f this paper shows that governments can create incentives for donations that not only support disaster reconstruction, but also mitigate the negative subjective well-being effects of disasters.

01 Sep 2015