Monday, September 9, 2013

Why Do The Rich Give Less?

There's a lot of research showing that the rich donate less than the poor (as a percentage of their income). I've seen statistics say the wealthiest Americans give 1.3% of their income while the poorest give 3.2% of their income. I've seen other studies claim that once your income goes over $100k the percentage of your income that you donate dives by about 3 percentage points.

[On a side note, do you see why these percentages make the One Percent Difference campaign look so unambitious?]

There's some good articles out there exploring the reasons that wealthier people are less generous (as a percentage) but I wanted to add my own two suggestions:

1. The Happiness Derived From Giving Has A Cap
I've read a few pieces of research that show money can buy happiness - to a point. In other words, as you earn more you become happier until you reach a certain threshold. I've seen that put at various amounts around €40k-€60k per year. After that your happiness levels off and it doesn't matter how much more you earn. I can believe that.

Is there a similar pattern in giving? Do you get more and more pleasure from giving away money, but only to a certain point?

If that was the case it would explain the figures. We want to give more and more, we want to give a higher amount. But once we hit a certain level there just really is nothing more in it for us and the amounts we choose to give, with pleasure, level-off.

If this is true how can we address it? How can we make giving continue to be pleasurable ad infinitum?

2. We Live In Fear Of Losing Our Lifestyle
One of the main reasons we don't give, no matter how wealthy, is not because we can't afford it but just in case we can't afford it. You may well have €10, €100 or a €1 million sitting there - and this could make a massive impact on someone else's life - but what if things go pear-shaped in the future and you need that money?

We give such a small percentage of our income because we fear being alive for another 30 or 40 more years and, if something goes wrong, we'd have to make sacrifices.

Look at Simon Cowell. He sits on a fortune of more than £200 million and earns about £50 million a year, and last week he was in the news talking about what he'd do with his money when he dies. Who can even spend that amount each year? Now if he knew for certain he would earn £50m a year for the rest of his life he would be much more willing to give away nearly everything he has right now.

Or what if the rich knew they could get their money back if they needed it?

What if the very wealthy could give all of their current wealth to a charity and should they need it in the future they could simply take it back? Think of it as prize bonds where the prize goes to someone who actually needs it. Charities could sit on the money, invest the money, even live off the interest, until that wealthy celebrity kicks their pearly bucket.

Would the wealthy give more if they knew there was no chance they'd ever have to clean their own house again?

No comments:

Post a Comment