Yale Insights: No Matter What We Earn, We Believe Our Richer Neighbors Have More to Give

By Gal Zauberman for Yale Insights We have a tendency to believe this moral argument— those who are richer should donate a higher proportion of their income. “Most of us cannot perceive how a person can have so much money without having tremendous abundance,” says Yale SOM professor of marketing Gal Zauberman. “We always think that if we only made a bit more, we’d have so much free money [to give].” We are likely to think higher earners should donate more since they have more money to spare. However, as people get wealthier, they also accumulate greater expenses. Hence, their perception of their own “spare” income doesn’t increase as much. The result, according to a study co-authored by Zauberman, is that each of us has a similar expectation of giving for ourselves, whatever our income level. At the same time, we consistently believe that people wealthier than us have greater capacity to give—as the authors put it, “passing the buck” for greater generosity to the wealthier, and to our future, richer selves. To investigate, Zauberman, Jonathan Berman of the London Business School, Amit Bhattacharjee of INSEAD, and Deborah Small of the University of Pennsylvania designed a series of experiments to gauge how much people thought they themselves could give to charitable causes, as well as how much they thought lower or higher earners should donate. The findings revealed how people overestimate how much “unconstrained” money a higher earner has in hand. “When you compare, you’re essentially looking at your lifestyle and their income,” Zauberman says. “You don’t realize that as a person earns more, their expenses increase too, so they’re just as constrained as they were with a lower income.” Read more on Yale Insights.