As Income Inequality Grows, do the Wealthy Become Less Generous?

A study reviewed  by John Tozzi in Bloomberg suggests this might be the case:

”   …That’s the implication of new research that suggests inequality makes wealthy people less generous. The study … … in the Proceedings of the National Academy of Sciences is the first to probe how inequality influences altruism.

Some earlier research in the U.S. has observed that the rich are stingier than people with more modest incomes. But studies in Europe and Japan didn’t find the same effect. “That was a bit of a puzzle for us,” says Stéphane Côté, a professor at the University of Toronto’s Rotman School of Management, who wrote the paper with colleagues from Toronto and Stanford. “That’s why we reasoned maybe a factor that seems to effect the rich is whether they live in a place that is highly unequal in terms of economic inequality.”

The team used existing data from a nationally representative survey of 1,500 Americans called the Measuring Morality study. That gauged generosity through an approach called the “dictator game” that has been shown to correlate with real-life giving. Participants are told they have 10 raffle tickets and are given an opportunity to transfer some of them to another, anonymous participant.

When they sorted the results by states’ levels of inequality 1GINI co-efficient. , the researchers found that rich people in states with the most skewed income scales were significantly less generous than their peers in states where wealth is more evenly distributed.

“Income Inequality Makes Rich People Stingier: A new study found wealthy people in states with skewed income scales were less generous.”   By John Tozzi in Bloomberg,