A recent study, conducted by the London School of Economics & Political Science and the Bank of England, has shed light on the relationship between economic inequality and charitable giving among affluent individuals residing in various communities.

While previous research has produced inconclusive findings on whether the wealthy exhibit greater generosity than the poor, this study employed a more localized approach to investigate the dynamics between generosity and income.

Generous giving

The study’s author delved into detailed economic data at the neighborhood level to gain deeper insights into the connection between generosity and income. By examining information on charitable donations in 2018 from the US Internal Revenue Service and data on income inequality from the American Community Survey spanning 2014 to 2018, the author sought to discern patterns within zip code areas, which serve as smaller community units.

Additionally, the author analyzed self-reported charitable giving and volunteering data from the UK survey “Understanding Society”, which was conducted between 2016 and 2018. They compared these responses with housing values to approximate neighborhood inequality.

In contrast to earlier studies, the author found that local inequality actually increased the generosity of wealthier groups in both the UK and the US, when observed through this more specific lens of local analysis. However, in the US, areas with higher levels of inequality exhibited less generosity among the lowest-income groups.

Reducing charitable giving

Further analysis revealed contrasting results. In these aggregated analyses, higher levels of inequality were found to reduce charitable giving across all income groups relative to the lowest income group (with incomes below $10,000). This discrepancy emphasizes the significance of the chosen spatial unit in determining the relationship between generosity and income.

While these findings establish a correlation between income and prosocial behavior in the context of economic inequality, they do not establish a causal relationship.

The author suggests that future studies should explore whether this more localized approach can be generalized to cultures beyond the US and the UK. Furthermore, the study calls for further investigation into the apparent contradiction between the effects of macro- and micro-levels of inequality on generosity and income, suggesting that increased economic segregation among communities may contribute to this phenomenon.

“Inequality is experienced locally, within peoples’ neighborhoods and communities,” they conclude. “The implications of this for how people behave toward others has been largely overlooked in the academic literature, which most often considers inequality from a macro perspective.”