THE last few years have proven to be immensely difficult for low-income households in Pakistan. High rates of inflation and low economic growth have exacerbated poverty and heightened the importance of redistributive welfare mechanisms.

One such mechanism practised widely across Pakistan, and the Muslim world in general, is zakat. Zakat constitutes an annual payment amounting to approximately 2.5 per cent of wealth held by an individual and represents one of the five pillars of Islam. Most Muslims fulfil this obligation during the holy month of Ramazan. Despite its importance as a mechanism for redistribution, research on actual zakat payments and their effects remains limited. Since 2021, the authors of this piece, based at the International Centre of Tax and Development and the Lahore University of Management Sciences, have partnered to examine how zakat functions in practice and its effects on social equity and state-society relations.

As part of our research, we were able to carry out a new nationwide survey of 7,500 Pakistanis in 2024. The results from this exercise uncover significant findings about zakat, and demonstrate its substantial economic and social impact in Pakistan.

Before moving on, it is important to clarify some aspects about the survey itself. While no estimate can be perfect, our figures currently represent the most accurate assessment of zakat payments in Pakistan, given the absence of comparable studies. We have implemented two specific methodological improvements to enhance accuracy.

First, we acknowledge that data on religious and charitable giving may be influenced by social desirability bias. Respondents might claim to pay zakat even when they don`t, potentially fearing judgement from interviewers. To address this, we incorporated a list experiment in our survey design.

This methodological approach allowed us to quantify the extent of misreporting. According to direct responses, 52pc of men and 45pc of women reported paying zakat. However, after applying corrections based on the list experiment results, our final calculations assume actual payment rates of 43pc for men and 39pc for women.

These adjustments produce more conservative and realistic estimates than would be obtained through conventional survey methods alone,increasing the reliability of our findings despite the inherent challenges in measuring religious giving practices.

According to the data we collected, Pakistanis contribute more than Rs619 billion in zakat each year. In 2024, the average contributor gave approximately Rs15,000, with over 50 million Pakistanis participating.

This annual zakat distribution exceeds the budget of the Benazir Income Support Programme, Pakistan`s largest state-led cash transfer initiative, which was allocated Rs598.71bn for 20242025. The zakat total also surpasses revenue from federal excise duty (Rs576bn in 2023-2024) and the amount Pakistan received in official development aid in 2022, despite being among South Asia`s major aid recipients. It is important to note that the estimates likely understate the actual amount suggesting that the true figuremay be higher.

We were also able to document how the actual practice of zakat in the country varies significantly from the state`s policymaking and administration around the issue. Since the 1980s, Pakistan has maintained a system for compulsory zakat collection through a state-administered fund with councils at the federal, provincial and district levels. However, the survey reveals that most Pakistanis prefer to bypass this system, with less than 2pc of contributors utilising the state fund.

This avoidance reflects a broader pattern of low trust in government institutions. The national state fund collects merely one-fiftieth of the estimated annual zakat contributions, as respondents overwhelmingly indicated a preference for managing their own giving.

The majority of zakat is thus distributed directly to individuals. Some contributors opt for intermediaries while still avoiding the state,choosing to give through mosques, schools, and to a lesser extent, non-governmental organisations.

Another main finding from our work is that gender significantly influences zakat distribution patterns. Through analysis of reported giving behaviours and a conjoint survey experiment, we consistently find that people prefer giving zakat to women, regardless of the contributor`s gender.

This gender preference is not prescribed in religious texts. While the Quran identifies eligible categories for zakat including the poor, the needy, administrators of zakat, recent converts, those in bondage or debt, those serving God`s cause, and travellers in need it does not specify gender preferences for recipients.

Nevertheless, our survey finds that more than half of respondents who gave zakat to individuals reported giving zakat exclusively to female recipients. This pattern suggests that zakat contributors recognise the economic challenges and barriers to state social protection that women in Pakistan face. In fact, the profile most likely to receive zakat according to the conjoint experiment embedded in the survey was widowed women, indicating that contributors consider both gender and economic vulnerability when determining recipients.

These findings highlight the importance of studying non-state social protection and redistribution mechanisms in Muslim countries, particularly given the scale of zakat compared to other socialprotection channels.

The next steps in our study of zakat will focus on a series of additional questions, especially those related to individual giving and its distributional impact: What factors determine who gives zakat? Why do people avoid the state fund? Are there biases in giving patterns based on proximity, language, or ethnic background? Do zakat practices vary by region, religiosity, or jurisprudential approach? How does widespread zakat payment affect attitudes toward state-led redistribution efforts like wealth taxes? The answers to these questions will provide further insight into the complex relationship between religious giving, social welfare, and governance in Pakistan and potentially other Muslim-majority countries. • Max Gallien and Vanessa van den Boogard am researchers at the IntemaNonal Cente for Tax and Development. Umair Javed teaches at Lums.