7 ms·

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

116 points by pavornyoh 11y ago

wwwdonohue 11y ago
"Contrary to what you think, this is not Christian Grey's favorite Saturday night activity" Thanks Ars Technica.
imh 11y 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 http://dx.doi.org/10.1073/pnas.1511536112)
- frostmatthew 11y 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 11y ago
It should be noted that by "rich", it's meant everyone who earns $125k/y or more (top 15% of the population).
- santaclaus 11y ago
  Is that household or individual income?
  - caseysoftware 11y ago
    Appears to be household: http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0 http://www.nytimes.com/interactive/2012/01/15/business/one-p... (That data is from 2012 though, so somewhat dated.)
- thaumasiotes 11y ago
  http://wallstreetpit.com/58851-the-typical-rich-family-is-a-cop-married-to-a-nurse/ http://wallstreetpit.com/58851-the-typical-rich-family-is-a-...
- deadalus 11y ago
  It should also be noted that the average annual income of the top 1 percent of the population is $717,000.
  - jschwartzi 11y ago
    Is that a mean, median, or mode?
    - Dylan16807 11y ago
      Do you really think it could be mode? (Also, it would be very strange to use "average of the top 1 percent" to mean "99.5th percentile")
    - SapphireSun 11y ago
      I'm guessing mean. It's a power law distribution, a few people are eye poppingly wealthy, and even fewer are double pop, but you might not have eyes left after the first one.
- ju-st 11y ago
Alex3917 11y 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 11y 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 11y 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 11y 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 11y 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?
xfitm3 11y ago
Could there be a relationship between being poor and lack of education? In my personal life I get solicited for investment capital a lot. I ignore almost all of these requests not because they're poor but because I don't believe they have the necessary education to be successful.
necessity 11y 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 11y ago
  When and where did you grow up?
  - necessity 11y 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 11y 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 ...
- tajen 11y 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.
  - 11y ago
DavidWoof 11y 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-states-income-inequality-map http://visualizingeconomics.com/blog/2007/07/17/united-state... of income inequality by state
- wozniacki 11y 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 11y 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.
    - wozniacki 11y ago
      ... a sweeping progressive political regime which is expected to last at least for another decade if not more. I should have added, nationally not regionally in the south.
andrewdb 11y 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.
- tajen 11y 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 11y 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 11y 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.
BurningFrog 11y ago
Just a reminder that perhaps 1/3 of individual studies in social sciences are wrong.
- SolaceQuantum 11y ago
  Would appreciate a source to this claim, especially if this is trying to imply that this is 1 of the 3.
  - BurningFrog 11y 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 11y 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. See also: http://www.npr.org/sections/goatsandsoda/2014/11/05/361433850/why-your-brain-wants-to-help-one-child-in-need-but-not-millions http://www.npr.org/sections/goatsandsoda/2014/11/05/36143385... Citing: http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves-One-Life-Saves-the-World-1wda5u6.pdf http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves... And: http://www.globalissues.org/article/26/poverty-facts-and-stats http://www.globalissues.org/article/26/poverty-facts-and-sta...

116 points by pavornyoh 11y ago

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

imh 11y 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 http://dx.doi.org/10.1073/pnas.1511536112)

frostmatthew 11y 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 11y ago

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

santaclaus 11y ago
Is that household or individual income?
- caseysoftware 11y ago
  Appears to be household: http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0 http://www.nytimes.com/interactive/2012/01/15/business/one-p... (That data is from 2012 though, so somewhat dated.)
thaumasiotes 11y ago
http://wallstreetpit.com/58851-the-typical-rich-family-is-a-cop-married-to-a-nurse/ http://wallstreetpit.com/58851-the-typical-rich-family-is-a-...
deadalus 11y ago
It should also be noted that the average annual income of the top 1 percent of the population is $717,000.
- jschwartzi 11y ago
  Is that a mean, median, or mode?
  - Dylan16807 11y ago
    Do you really think it could be mode? (Also, it would be very strange to use "average of the top 1 percent" to mean "99.5th percentile")
  - SapphireSun 11y ago
    I'm guessing mean. It's a power law distribution, a few people are eye poppingly wealthy, and even fewer are double pop, but you might not have eyes left after the first one.
ju-st 11y ago

Alex3917 11y 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 11y 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 11y 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 11y 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 11y 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?

xfitm3 11y ago

Could there be a relationship between being poor and lack of education? In my personal life I get solicited for investment capital a lot. I ignore almost all of these requests not because they're poor but because I don't believe they have the necessary education to be successful.

necessity 11y 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 11y ago
When and where did you grow up?
- necessity 11y 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 11y 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 ...
tajen 11y 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.
- 11y ago

DavidWoof 11y 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-states-income-inequality-map http://visualizingeconomics.com/blog/2007/07/17/united-state... of income inequality by state

wozniacki 11y 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 11y 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.
  - wozniacki 11y ago
    ... a sweeping progressive political regime which is expected to last at least for another decade if not more. I should have added, nationally not regionally in the south.

andrewdb 11y 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.

tajen 11y 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 11y 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 11y 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.

BurningFrog 11y ago

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

SolaceQuantum 11y ago
Would appreciate a source to this claim, especially if this is trying to imply that this is 1 of the 3.
- BurningFrog 11y 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 11y 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. See also: http://www.npr.org/sections/goatsandsoda/2014/11/05/361433850/why-your-brain-wants-to-help-one-child-in-need-but-not-millions http://www.npr.org/sections/goatsandsoda/2014/11/05/36143385... Citing: http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves-One-Life-Saves-the-World-1wda5u6.pdf http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves... And: http://www.globalissues.org/article/26/poverty-facts-and-stats http://www.globalissues.org/article/26/poverty-facts-and-sta...