Study: Rich are less generous when they think there’s high economic inequality | Hacker News Reader

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

arstechnica.com

116 pointspavornyoh51 comments

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)

> 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..."

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.

When and where did you grow up?

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.

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 ...

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.

I have similar attitude. My commute used to involve walking past street fundraisers. They would show me some starving kid or something else equally tear jerking. On the other hand helping would be noble thing to do.

On the other hand these fundraisers are practically bullying people, and I would be funding that too. Making thousands of people feel guilty first thing in the morning has to have some large scale psychological effect. Likely not for good.

If I give, I want to do it on my own terms.

I am of a similar opinion. We are already taxed a ridiculous amount, and have absolutely no say in how that money gets spent. In fact, I've even made constructive suggestions about how people should be allowed to at least pick the ratios with which each section/budget of government their taxes go to.

And then, seeing everything from wasteful wars, to corruption, to useless government "projects" and "committees". Meanwhile, there are so many people starving and dying on the streets, being murdered and assaulted, and dying in preventable car accidents, amongst many other things.

I honestly can not take a state seriously that simultaneously wants to guilt me into paying more of my "fair share" because 'think of the poor', while on the other hand it doesn't fix the basic, universal needs of our society, including the poor. It's hypocrisy, and I refuse to be double-taxed, or blamed for lack of social-program funding.

Sorry for the rant. But I live in a society where 90% of the population pays no income tax at all as they're under the lowest "progressive" taxation bracket.

I am of a similar sentiment. Why try to plug holes (charity) when we should building a better ship (social programs, tax incentives, etc)? Trying to work on a small scale is noble, but not at all efficient.

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.

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?

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-state... of income inequality by state

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?

> 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.

  ... 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.

Aren't NY, CT, MA, and DC the most unequal parts of the US? All "Union"? I don't think your explanation is convincing.

In the above map, those areas are not marked with the "unequal" color, can you share your source as a counterpoint?

Edit: the arstechnica article states DC is the most unequal place in the U.S. It appears there is a disparity between the two sources.

https://en.m.wikipedia.org/wiki/List_of_U.S._states_by_Gini_...

That map is by county, while most inequality in the US is concentrated in the cities; the most important drivers of state-level inequality are thus hidden. It is not a very good map for this purpose.

Indeed, though your map is even lower resolution than the previous one.

I can agree that neither map tells the whole story, and the GP's premise is strained at best.

The black belt is striking in that map.

https://www.google.fi/search?q=u.s.+black+belt&tbm=isch&tbo=...

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

Is that household or individual income?

Appears to be household:

http://www.nytimes.com/interactive/2012/01/15/business/one-p...

(That data is from 2012 though, so somewhat dated.)

http://wallstreetpit.com/58851-the-typical-rich-family-is-a-...

It should also be noted that the average annual income of the top 1 percent of the population is $717,000.

Is that a mean, median, or mode?

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")

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.

if your earn >125k€/y your are in the top 1% in Germany

That sounds pretty damn low, so I had to look it up myself. And you're right about the number.

American counterpats earn x3 as much, and even top 5% Americans earn more than 125k euro.

At my company, many people with so-so talent make $90-$120k. There is no way they could make anything close to that anywhere else in the world.

In Germany your arguably "lower" income comes with healthcare, unemployment insurance and pension rights, which probably makes up for the difference.

That doesn't mean much, the educated professional upper middle class in the US earns more and has vastly more disposable income after taxes even when you count the costs of healthcare and personal savings.

And it's not like if you are living in Europe you won't have those expenses I lived in the Netherlands and now living in the UK and in both countries I still pay for private insurance because it covers much more and makes life so much easier for quality of life and preventative treatment. The NHS is great if I get stabbed and need ER or if I get cancer and need treatment for decades but if I want to see an orthopedist or get good dental hell no...

The US also has lower overall COL, considerably cheaper housing (don't bring the Valley up please), cheaper food, cheaper consumer goods, combine that with higher wages especially in highly sought after professions and you get an overall better deal.

I have a coworker living and working in Berlin. He won't stop raving about how cheap it is to live nicely there. He's constantly trying to recruit me to move. I think US companies must just pay more.

Berlin isn't that expensive as far as Germany goes, it was considered a "shithole" for over a decade post unification, Munich, Frankfurt, Dusseldorf and even Hamburg are considerably more expensive If you come from the "valley" yes Germany will look cheaper especially if you are planning to rent, but then you'll find out that even a tiny 2 bed (500-600 sq/f) in Berlin in anything that's not a low income project that looks like the backdrop set to the Wire will cost you 250-300K EUR and the prices go up from there, if you want a home that is comparable to US sizes 1600-1800 sq/ft which will be very large 3.5-4 bed in Berlin you'll have to say goodbye to 800-1M EUR. The average dev salary in Berlin will be about 40-50K EUR, your friend might be very special and he gets much more and everything looks rosy but it's not the common case. Now don't get me wrong you won't feel "poor" earning 40-50K in Berlin but you won't see nearly as much disposable income as one would in the US. I earn about 100K GBP living in London and while I won't call myself poor I won't even begin to compare myself to friends living in the US making comparable or even lower galleries. The disposable income after tax is absurdly different, and the expenses in the UK and London specifically are several times higher on everything including rent even when comparing to valley prices. Europe is quite good for lower middle class, and it's very very good for old money, but allot of absurdly bloated costs make it harder for people to actually advance in life, especially when their jobs demand or require a certain life style which comes at a premium.

100k pound is very good salary in UK, even in London. That's more than most London GP makes.

How do people in London afford to live there?

By spending sometimes 80% or more of their post tax income on rent. I'm lucky and spend only about half, not remotely broke but will never be able to buy in London either. In the us a similar income would get you a nice house, a pool and even a tesla, in the uk a Prius plugin will cost nearly half of my yearly post tax income and a 2 bed where I live is about 10-12 years of post tax wages.

> In the us a similar income would get you a nice house, a pool and even a tesla

In a comparable place in the US (i.e. NYC) a similar income gets you similar housing - and not much more in food/services.

If you go out into the boonies, yes US housing is cheap but so is the UK. And in both places few people manage to earn six figures outside the bubbles of NYC, Boston and SF/Valley (nationwide, $100k is 92nd percentile of income give or take).

It makes up for some of it, but definitely not all. Rich Americans are the richest.

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.

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.

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.

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.

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.

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.

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.

Citing: http://globaljustice.uoregon.edu/files/2014/07/Whoever-Saves...

And: http://www.globalissues.org/article/26/poverty-facts-and-sta...

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

Would appreciate a source to this claim, especially if this is trying to imply that this is 1 of the 3.

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.

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.

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

Thanks Ars Technica.

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