Mulching can contribute to disease in some circumstances when there is too much organic matter present. In other cases mulching contributes to the soil. My yard is sandy and is in dire need of top soil so I either mulch or side discharge. A homeowner should evaluate the particular need of his yard before deciding to bag or not.

If you have any weeds in your lawn, bagging reduces the number of weed seed you spread around.
I have lost my battle with goosegrass and try to cut before it goes to seed.

Mulching IMHO.

I only see two purposes for bagging.

1) your grass is so tall that even at the highest deck setting you still can't mulch it without a mess, or 2) you have a lot of leaves, sticks, weeds, horse manure or debris that you would like to grind up and move to some area of your property that isn't so lush.

Routine bagging outside of justifications 1 or 2 doesn't make sense to me. It's a lot of work and it's not as good for the soil.

And please, if you're putting grass in bags, can I have it? If I had all the clippings from all your lawns for ten years or so, I might be able to have decent pastures.

In spring you should bag because grass grows faster and you don't need to hold moisture in. Summer time mulching is better due to lack of rain and nutrients it provides. Fall you should bag if you have a lot of leaves. If not mulching is good. The answer is not which is better but at which part of the year you should mulch vs bag. Also if you are a mulcher you should check your Thatch thickness every year

Many excellent replies to this. Especially about the fungus or disease problems.

I do not bag until a month after I have put down fertilizers or per-emergence weed killers. Why? The lawn mower is a vacuum and it will pick up the fertilizer and per-emergence weed killers. It will not pick all of it up, but why throw money away. So, at this time mulch.

As for picking up the weed seeds from bagging. If you put down a per-emergence weed killer then that theory is not necessary. Always in my area z7 Pr-Emergence when the Forsythia is in bloom.

Mulching in the summer is best. The grass is dry and keep the grass high. Believe it the mulch will become thatch and keep the soil cool.

Yes, Grass clippings stink. Mix them with old leaves and they will quickly break down. Try putting your hand in a bag of 1 week old grass. Hot yes. In order to be compost it needs other items like leaves old food, but not meat.

Enough said BTW this is what my side yard looks like.

Mowers pick up a minimal amount of granular product. Bagging the leaf removes more of the product than the granules you will pick up bagging. That being said, just dont bag. Most people do it backwards. They bag in spring and mulch in summer. Here is why I dont: In the spring you have nutrient and water laden grass tissue that is great for your soil structure and food web. Mow more often and let it fly (or mulch). In summer, grass plants become lethargic and there is minimal growth. Bag now with high lift blades and lift lethargic grass blades up for a fresh clean cut. This will remove die off debris and stressed tree debris too. Since there is minimal growth you wont be removing an appreciable amount of organic matter. Resume mulching when cool soil temperatures trigger new upright grass growth and through fall leaf season.