The study attempts to find the extent to which the Social Demonstration Effect and Religiosity have an impact on the Charitable Spendings appearing in form of efforts towards poverty alleviation, providing financial transfers to internally displaced persons and as a response to disasters. Despite the fact that Pakistan is a developing nation, it possesses a strong culture of charitable giving which reflects high degree of concern for humanity among ordinary people in the country. This supports the government’s initial effort to drive social progress in Pakistan. In order to pretest the impact of Social Demonstration Effect and Religiosity a cross sectional foundation has been preferred and the sampling frame was based upon the estimates on income disparity and the segregation of income groups. The number of respondents from five different income groups was selected on the basis of income received by each group as suggested by the Lorentz curve for Pakistan. Important sections in the questionnaire include Religiosity, Spending for Humanity, Self-personal interest, Educational quality and Socio economic factors. Competing econometric models namely Ordinary Least Squares model, Weighted Least Squares and Median Regression have been estimated so that to consolidate the impact of Social Demonstration Effect and Religiosity upon Charitable Spendings comprehensively. Model estimates entail the Social Demonstration Effect present in the society, the impact of religious norms that mandate donations and the degree to which Tax concessions help generate funds for charity. Government regulations to introduce social awareness programs about the importance of charities in religion and their effect on the economic welfare of the country tends to be a viable option to generate more funds for charities.
Keywords: Charitable spending, Social demonstration effect, Religiosity, Weighted Least Squares model, Median Regression.