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LONDON — The wealthy are often depicted as callous and selfish, but a noteworthy new study has found that local communities can go a long way toward fostering more giving behavior in the wealthy. Scientists at the London School of Economics & Political Science and Bank of England found that rich people living in communities with greater levels of economic inequality tend to be more generous — in terms of both charitable giving and prosocial behaviors.
Plenty of earlier projects have attempted to analyze whether the rich tend to be more or less generous than the poor, as well as if this tendency shifts depending on the degree of economic inequality. So far, these studies have yielded inconclusive results. Prior work in this vein has been conducted at a macro level, using state, regional, and nation-wide aggregated data. This latest study, however, performed a much more specific analysis of economic data at the local, neighborhood level, intended to provide further insight into the relationship between generosity and income.
Lead study author Joel Suss assessed information encompassing charitable donations in 2018 from the U.S. Internal Revenue Service, as well as a 2014-2018 dataset on income inequality from the American Community Survey, using zip code areas (with an average mean population of 14,041) as the most granular community unit. Suss also analyzed data on self-reported charitable giving and volunteering from the 2016-2018 UK survey “Understanding Society” and compared that information with housing values to approximately measure neighborhood inequality.
Unlike earlier studies, Suss found that local inequality increased the generosity of richer groups - in both the U.K. and U.S. - when viewed through this more specific local lens. Regarding the U.S. analysis specifically, more unequal areas also showed less generosity from the lowest-income groups. Then, during a series of follow-up analyses that aggregated the U.S. data to a broader degree at the county and state levels (similar to the methods used by previous studies), the results reversed, showing increased inequality reducing giving by all income groups relative to the lowest income group (incomes less than $10,000), underscoring the importance of the chosen spatial unit.
These findings indicate a correlation between income and prosocial behavior in the context of economic inequality, but they can't explain the cause. Suss would like future research to assess if this more granular approach generalizes to cultures beyond the U.S. and U.K. Researchers also encourage future projects to investigate the seemingly contradictory result of macro-and micro-levels of inequality showing opposite effects on generosity and income, indicating that this may be the result of increased economic segregation across communities.
“Inequality is experienced locally, within peoples’ neighborhoods and communities. The implications of this for how people behave toward others has been largely overlooked in the academic literature, which most often considers inequality from a macro perspective. This paper examines the relationship between local inequality and charitable giving—an important form of pro-social behavior—in large US and UK samples. The results indicate that local inequality is associated with increased generosity amongst rich people in both places, which is contrary to findings at more aggregated geographical levels, pointing to contrasting implications of inequality at different spatial levels,” the study authors add in a media release.
The study is published in PLoS ONE.
