The Secret of Why Wealthy Americans Aren't Always the Most Charitable

Do you ever pass a homeless person on your way to work? Is there a soup kitchen in your town? Do you know someone who struggles to pay the bills?

If you encounter financial suffering on a regular basis, you may be more likely to donate money to charitable organizations. According to a new study by the Chronicle of Philanthropy, people with higher incomes who live in economically diverse areas are more likely to give to charity than those with higher incomes who live in more homogeneous areas. The study found that people who made more than $200,000 contributed an average of 4.2 percent of their discretionary income. But in areas in which more than 40 percent of residents made $200,000 or more, these wealthy residents donated only about 2.8 percent.

“The study suggests that wealth has this basic insulating effect. It makes people more and more insulated from others, more prioritizing of their own interests, less likely to feel compassion toward other people and feel like charity is a good thing,” said Paul Piff, a social psychologist who studies cultures of wealth and poverty. 

As NPR reported, higher income residents in one economically diverse area in Washington, DC, donated much more — 12 percent of their discretionary income — than those living in DC’s wealthier neighborhoods. This diverse area, which includes some of DC’s poorest neighborhoods, is home to several non-profits, such as Bread for the City, where people line up everyday to obtain their basic needs.

Kristin Valentine, Bread for the City's development director, told NPR she was not surprised by the generosity of the area.

She said, “They see every day more need than probably the average person.”

A 2007 report from the Center on Philanthropy at Indiana University found that most of donations from wealthy people were going to cultural institutions or their alma maters, not to helping those less fortunate.

Piff said there are frightening implications of the Chronicle’s results as well as other research results in the field. 

“This idea of trickle-down economics, that the people who have a lot are going to ultimately benefit those who don’t … there’s a reason to question that basic intuition because what we’re finding is that unlike other types of resources, money behaves differently,” he said. “The more of it you have, the more of it you want, and the more you’d be willing to get that extra money … it’s this self-perpetuating cycle that would just continue, it seems, to push inequality in even more extreme directions.”

Piff recalls one study he performed in which people of various economic classes were told to play a simple game — they would click a button on the computer and it would roll a die. Participants were told that the higher their rolls, the better their chances would be of winning $50. The game, however, was rigged. Everyone received a score of 12, but who do you think lied about their scores the most? To the researchers' surprise, it wasn’t those making under $15,000 a year, who could severely use a $50 treat. It was the people who made $150,000 or more, who were three to four times more likely than the least well-off participants to cheat at the game.

“The more you have, the more likely you are to privilege yourself over others,” Piff said.

In fact, the Chronicle’s study also found that lower-income people donated more than those with higher-incomes — results that coincide with years of past research. They found that households with incomes between $50,000 - $75,000 donate an average of 7.6 percent of their discretionary income, while those making $100,000 or more donate an average of 4.2 percent.

Piff said it’s important to remember that nobody is hardwired to be more generous, and that various social factors must be recognized to understand how people give.

“It’s not the case that wealthy people are necessarily bad apples. It’s that the situations that wealth often seems to give rise to can be pernicious or can have these social costs,” he said. “So if wealth affords you the ability to live in this big house surrounded by other big houses, occupied by people who are similarly wealthy, in terms of charity, in terms of compassion, there’s a cost there.”

Piff said that although we can’t necessarily get those with higher incomes to live in neighborhoods that are more economically diverse, there are simple interventions we can make in terms of exposing people to the needs of others and reminding them that people are suffering. He said that telling people about the benefits of cooperation and egalitarianism “can have a huge affect on levels of giving, levels of kindness, and altruism.”

Still, the Chronicle’s study reiterates the fact that our economic system — which rests on the belief that the few, who profit off of the lives of everyone else, will know how to invest their profit in a way that benefits the rest of us — is flawed. In a society where money is power and power is addictive, the affluent have little motivation to share their wealth. And though some wealthy people, especially those who come in contact with people suffering financially, may choose to give back out of empathy, guilt or to simply feel better about themselves, it’s clear that a small portion of their discretionary income is not enough.


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