Study: Rich are less generous when they think there’s high economic inequality

http://arstechnica.com/science/2015/11/the-rich-are-less-generous-when-they-think-theres-high-economic-inequality/

by pavornyoh • 11 years ago

116 51 11 years ago

arstechnica.com

wwwdonohue• 11 years ago

"Contrary to what you think, this is not Christian Grey's favorite Saturday night activity"

Thanks Ars Technica.

imh• 11 years ago

This is great reporting. The reporter explicitly pointed out it isn't necessarily a causal effect instead of exploiting the misunderstanding that it might be. Then she succinctly explains the findings and a few potential interpretations without evangelizing any of them. She even linked to the original paper! I wish more scientific reporting were like this.

(Note: There's a typo in the link to the original paper. It's missing a period after pnas: http://dx.doi.org/10.1073/pnas.1511536112)

frostmatthew• 11 years ago

This is great reporting. The reporter explicitly pointed out it isn't necessarily a causal effect instead of exploiting the misunderstanding that it might be.

I agree this is great reporting but your comment suggests there is no causal effect, which is not the case as concluded by the researchers (or as presented in this article).

Only the first part of the study doesn't demonstrate causality which is why the author states "Of course, this association does not demonstrate causality" which is why the researchers then "showed the study participants a pie chart depicting simulated economic data in their home state" and that's how they determined there is a causal effect. In the abstract for the study which you link to it even states "To better establish causality..."

icebraining• 11 years ago

It should be noted that by "rich", it's meant everyone who earns $125k/y or more (top 15% of the population).

santaclaus• 11 years ago

Is that household or individual income?

caseysoftware• 11 years ago

Appears to be household:

http://www.nytimes.com/interactive/2012/01/15/business/one-p...

(That data is from 2012 though, so somewhat dated.)

thaumasiotes• 11 years ago

http://wallstreetpit.com/58851-the-typical-rich-family-is-a-...

deadalus• 11 years ago

It should also be noted that the average annual income of the top 1 percent of the population is $717,000.

jschwartzi• 11 years ago

Is that a mean, median, or mode?

ju-st• 11 years ago

if your earn >125k€/y your are in the top 1% in Germany

pcurve2• 11 years ago

That sounds pretty damn low, so I had to look it up myself. And you're right about the number.

American counterpats earn x3 as much, and even top 5% Americans earn more than 125k euro.

At my company, many people with so-so talent make $90-$120k. There is no way they could make anything close to that anywhere else in the world.

Alex3917• 11 years ago

So as the consequences of being poor become more severe, people are more likely to hoard money? Describing this as rich people being less generous seems like a questionable interpretation.

Hytosys• 11 years ago

If you interpret these results as the material conditions of a class instead of the material conditions of every individual of that class, the results are very easily digestible. Nothing personal.

daxfohl• 11 years ago

Interesting thought but I'd still attribute it more toward a disconnect with the "other side". OR, very high-disparity societies have such little social mobility that donations are seen as futile even if you'd be otherwise inclined.

Regardless, generosity or the lack thereof, under the microscope, is just physics no matter what the explanation.

jws• 11 years ago

They suggest a couple of explanations:

those at the top may feel a) more entitled to their status; and b) more worried about losing it

I also suggest that with high income inequality the rich simply do not have the ability to raise the entire lower class significantly with donations. Individual giving is not an effective solution to the problems in their world. They can still raise an individual up, but it does not address the problem. Other solutions are called for.

With more equal income distribution a relatively wealthy person can help individuals with anomalously poor situations resulting in a higher floor.

noobermin• 11 years ago

I also suggest that with high income inequality the rich simply do not have the ability to raise the entire lower class significantly with donations

The paper (linked elsewhere in the comments) suggests something along those lines.

In addition, where greater inequality exists, the living conditions of the poor are particularly bleak and the apparent costs of low economic standing are more glaring. These settings may increase higher-income individuals’ concerns about losing their privileged position, concerns that in turn may lead to less willingness to share resources with others. In contrast, where inequality is low, higher-income individuals might be as generous as their lower-income counterparts, or even more generous because their greater capacity to give makes giving more affordable to them.

That reasoning might have not made it into the ars article.

While this is worthwhile discussion to have, I'm not sure it really explains this effect. They found that lower income people (in the lower 15% range) in those same unequal areas did not demonstrate this correlation. Are the poor somehow less aware of the beneficial impacts that a gift to another in the dictator game will raise that other person's stature in life?

necessity2• 11 years ago

I'm "rich" by my third world country standards. I used to make individual (humble) donations when I was younger and lived in the same standard as the majority of the population. Nowadays I don't. The more I earn the more the government takes (now almost 50%), so it feels to me I'm already doing a forcibly donation, as there are countless wealth distribution programs (which didn't exist when they would be of use to me, and I did fine without them). I have zero intentions of making any kind of donation, only if it works as a tax reliever. I do however make regular donations to free software organizations and other organizations that produce something that I use or like.

JamesBarney• 11 years ago

When and where did you grow up?

necessity2• 11 years ago

Brazil in the 90's, before Plano Real. Welfare only really kicked in with Lula in 02. At first it was great, helped a lot of people in need. It began to spin out of control later though, together with gov. spending, credit incentives and inflation.

Swizec• 11 years ago

I come from Slovenia. We also have a progressive taxation rate with no cap.

If I didn't run my income/expenses through a business entity, I would be paying 56% in taxes, mandatory pension, and state-mandated healthcare.

I wonder why all the software engineers I know form sole proprietorships and get paid through those ...

tajen2• 11 years ago

When donating there's also the problem of getting spammed. Happened to me, at my employer's address, and they resold my address to partners after I had written an explicitly strong warning in the donation form, and I've promised never to trust charities since then.

vlehto2• 11 years ago

I have similar attitude. My commute used to involve walking past street fundraisers. They would show me some starving kid or something else equally tear jerking. On the other hand helping would be noble thing to do.

On the other hand these fundraisers are practically bullying people, and I would be funding that too. Making thousands of people feel guilty first thing in the morning has to have some large scale psychological effect. Likely not for good.

If I give, I want to do it on my own terms.

zo1• 11 years ago

I am of a similar opinion. We are already taxed a ridiculous amount, and have absolutely no say in how that money gets spent. In fact, I've even made constructive suggestions about how people should be allowed to at least pick the ratios with which each section/budget of government their taxes go to.

And then, seeing everything from wasteful wars, to corruption, to useless government "projects" and "committees". Meanwhile, there are so many people starving and dying on the streets, being murdered and assaulted, and dying in preventable car accidents, amongst many other things.

I honestly can not take a state seriously that simultaneously wants to guilt me into paying more of my "fair share" because 'think of the poor', while on the other hand it doesn't fix the basic, universal needs of our society, including the poor. It's hypocrisy, and I refuse to be double-taxed, or blamed for lack of social-program funding.

Sorry for the rant. But I live in a society where 90% of the population pays no income tax at all as they're under the lowest "progressive" taxation bracket.

dikdik• 11 years ago

I am of a similar sentiment. Why try to plug holes (charity) when we should building a better ship (social programs, tax incentives, etc)? Trying to work on a small scale is noble, but not at all efficient.

DavidWoof• 11 years ago

One thing people outside the US may not realize about studies like this is that a very large percentage of socioeconomic breakdowns in the US are proxies for the traditional north-south civil war divide. Compare a map of income inequality by state and overlay the 1860 election and you'll be looking at extremely similar maps.

So, to a large degree, this study is merely saying that upper income people in the US South are less generous than upper income people elsewhere in the country, something that isn't a surprise to anybody to anybody who even remotely follows US political trends.

http://visualizingeconomics.com/blog/2007/07/17/united-state... of income inequality by state

wozniacki2• 11 years ago

Do you see this mismatch in "generosity" in the American south versus the rest of the nation correcting itself anytime soon, whether through a change in demographics or whether through the changing tide of policies as a result of more & more progressive administrations in the coming years?

It is generally agreed by political commentators that we are in the midst of a sweeping progressive political regime which is expected to last at least for another decade if not more.

Or do you see the southern states further entrenching themselves in their ways, digging in their heels in these and other social upliftment areas?

cjslep• 11 years ago

It is generally agreed by political commentators that we are in the midst of a sweeping progressive political regime which is expected to last at least for another decade if not more.

Which southern State Legislature(s) and/or Governors are these political commentators discussing? North Carolina's State Legislature under McCrory has been appallingly embarassing, and with Thom Tillis ousting Kay Hagan it has felt like the Good Ol' Boy's club all over again.

didgeoridoo2• 11 years ago

Aren't NY, CT, MA, and DC the most unequal parts of the US? All "Union"? I don't think your explanation is convincing.

carboncopy2• 11 years ago

In the above map, those areas are not marked with the "unequal" color, can you share your source as a counterpoint?

Edit: the arstechnica article states DC is the most unequal place in the U.S. It appears there is a disparity between the two sources.

vlehto2• 11 years ago

The black belt is striking in that map.

https://www.google.fi/search?q=u.s.+black+belt&tbm=isch&tbo=...

andrewdb• 11 years ago

Perhaps this could be explained by the conflict between social power (voluntary generosity and kindheartedness) and State power (compulsory "generosity"). If the State taxes you, claiming that they will use the funds for helping the less fortunate, you may perhaps be less compelled to help the less fortunate voluntarily because you've already paid the State to do it for you.

When you see a beggar on the street, you may feel compelled to give him money or food, which is an act of your social power, but you may also feel compelled to do nothing, thinking to yourself that you have no responsibility to help the beggar, as the State has already extracted money from you in order to, supposedly, meet the needs of people like the beggar.

tajen2• 11 years ago

This is exactly my feeling with the French president. I've voted for a leftish president. Poverty is exactly how terrorism grows, when people are desperate, and indeed those terrorists were born in France and Belgium. Now the only decent leftish party of France uses the tax money... to kill people and plant bombs in some remote country where our terrorists didn't grow up. This is exactly how State power is misusing funds that were originally destined to help the less fortunate.

datashovel• 11 years ago

It sounds like a very reasonable way to react. If I'm a billionaire and, because of my commute my upbringing or some other factors, regularly see poverty-stricken neighborhoods and how those people live and how they're treated by society I will do everything in my power to guarantee my family and I will never be in that position.

The tough part seems to be convincing people we know how to end poverty, because our track record is not great in this regard.

maxxxxx• 11 years ago

I think the more inequality there is the more poor and rich live in their own worlds where they never see each other. That makes it harder to relate to each other.

BurningFrog2• 11 years ago

Just a reminder that perhaps 1/3 of individual studies in social sciences are wrong.

SolaceQuantum• 11 years ago

Would appreciate a source to this claim, especially if this is trying to imply that this is 1 of the 3.

BurningFrog2• 11 years ago

It's an estimation more than a provable fact.

I'm not claiming anything about this study more than that you shouldn't blindly believe it.

brownbat• 11 years ago

It's almost like there's a "scale of the problem" effect. If you see a picture of one starving child, you're much more likely to give than if you're presented with statistics on the three-some billion people who live on less than $2.50 a day.

Maybe our minds bucket each tragedy we're presented as 'one problem,' then estimate our ability to make a difference on that 'one problem' before expending energy on it.

This heuristic produces inconsistent results, but it's not a crazy heuristic if boiled down to: "fight the battles you can win."

One solution could be to remind people to subdivide problems and tasks into goals that can be accomplished, not sure.

Citing: http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves...

And: http://www.globalissues.org/article/26/poverty-facts-and-sta...

Study: Rich are less generous when they think there’s high economic inequality

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