Wealthy people give more dollars to charity because they have more to give. But studies show that middle-class and poorer people give away higher proportions of their money.
In fact, the National Center for Charitable Statistics finds that households earning less than $50,000 donate 4 percent of their adjusted gross income, while those earning $200,000 to $250,000 give away about half that—2.4 percent. Only the super rich—those with adjusted gross incomes of more than $10 million a year—give more to charity (5.9%) than the lower middle-class, according to data from the IRS.
In a smaller study at the University of California, Berkeley, researchers brought rich and poor members of the community into their lab. They gave each person the equivalent of $10, and told them they could either keep the money or share it with a stranger. The people who earned less than $25,000 a year gave 44 percent more to the stranger than those who earned $150,000 to $200,000 a year.
Behind the Scrooge effect
Psychologist Dacher Keltner, Ph.D., director of the UC Berkeley Social Interaction Lab, offers this hypothesis: When you have less money, you must rely on other people. If your car breaks down, friends give you a ride, and you do the same for them. So you form strong social connections out of mutual need.
Upper middle-class and wealthy families can buy that type of support. If your car breaks down, you rent one until your car is fixed. “Wealthy kids don’t die at the same rate as poor kids. They live in safer neighborhoods. But they lose exposure to suffering,” Keltner says. “They don’t learn to be compassionate to people in need.”