Rich People Donate More When They Actually See Poor People, Study Suggests

Topline

A new study found the rich are more likely to donate to charitable causes when living in areas with high levels of economic inequality—challenging studies that suggest the inverse is true.

Hand putting Coins in glass jar for giving and donation.

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Key Facts

According to a new study published Wednesday in the journal PLOS ONE, rich people who live in places with higher levels of economic dispensary tend to offer more in charitable donations and prosocial behaviors.

Prosocial behavior is voluntary behavior meant to benefit someone else, which can be in the form of positive interactions, sharing or offering help or behaviors that reduce stereotypes.

The study crunched IRS data on charitable donations, volunteer data from the U.K. Understanding Society, and inequality data from zip codes.

According to the National Philanthropic Trust, 86% of affluent households either maintained or increased their donations in 2021 despite uncertainty about the potential spread of Covid.

Americans can deduct money donated to charity on their taxes, but a 2019 report released in Business History Review concluded this only benefits the rich by protecting their “voluntary giving to public goods.”

Contra

A 2015 study published in Psychological and Cognitive Sciences found high levels of economic inequality leads the rich to be less generous than lower-income people. However, there was no correlation between generosity and income when inequality was generally low. The report concluded the rich were less likely to donate in settings with high economic inequality because they were concerned about losing their “privileged position.” A separate study published in Nature Aging found people living in poorer countries are more willing to donate to a hypothetical charity than those in wealthier countries, especially if the charity helped people in their own respective countries.

Big Number

$175 billion. That’s how much the world’s richest donated to philanthropic causes in 2020, accounting for more than one-third of global individual giving, according to a Wealth-X report. $85 billion alone was from the U.S.’s richest.

Key Background

It’s been long believed that higher-income people are more selfish than their lower-income counterparts. A study published in the Journal of Personality and Social Psychology found rich people are less likely to offer help to a stranger in distress than lower-class individuals. The paper hypothesizes this is because lower-class people are forced to be more community oriented as a way to adapt to their more hostile environment. It’s also been found that upper-class individuals behave more unethically than lower-class individuals. Several studies revealed the rich are more prone to breaking the laws of the road, lie in a negotiation, cheat to increase their chances of winning a prize, endorse unethical behavior at work and exhibit unethical decision-making tendencies. Though data on their income, wealth and giving is sparse, households making at least $2 million and more per year account for a significant portion of total giving, according to data from Econofact. 88.3% of households making between $2 million and $5 million annually donate 3.44% of their income on average. 95% of households making more than $10 million a year donate on average 8.6% of their income. However, middle class households making between $50,000 and $75,000 donate on average 7.6% of their income to charity, and the poorest one-fifth of Americans donate 4.3% of their income to charitable causes.

Tangent

37.9 million people were living in poverty in the U.S. in 2021, according to the Census Bureau. Conversely, the U.S. has the biggest share of billionaires than any other country, according to Forbes reporting, with a total of 735. In November 2022, American billionaires accounted for a combined wealth of $4.48 trillion. Some argue large corporations like Amazon only exist at the expense of workers’ welfare, and billionaires generally exist only because of inequity. The 2022 World Inequality Report notes billionaires account for 3% of all of the world’s wealth—a large amount in the hands of just over 2,600 people.