How rich is rich enough to give some away?
I’m just finishing a paper I’m writing with Dr Pamala Wiepking, an expert on charitable giving who works at Vrije University, Amsterdam. Our paper is called ‘Feeling Poor, Acting Stingy’ and is a study of how people’s feelings about money can affect their charitable giving. We had access to a survey that asked people about both their money beliefs and their giving behaviours and we found that people who have insecurities about their wealth – who feel they don’t have enough or are worried about losing what they have – make smaller donations than those who are confident about their money.
I think it’s fascinating that people who have exactly the same amount of wealth can either be relaxed and feel they have enough to spare to give a nice chunk away, or can feel uptight and worried about letting go of any of it. Of course how much money you think you need depends on a lot of factors, like how many dependants you have or the size of regular outgoings like mortgages. But an interesting study called ‘A Bit Rich’, written in 2002 by Laura Edwards and published by IPPR, contains quotes from rich Brits who felt totally strapped for cash and with ‘nothing to spare’. Memorably, one said,
“Wealthy? It’s £50 million and upwards as far as I’m concerned. £50 million is the point at which you don’t have to panic anymore”
And another claimed,
“I think I’d need to have something like £4 million in the bank to feel wealthy”
(both quotes from p.35 of the report, which is free to download)
Our paper concludes that people’s own perceptions of their wealth – however objectively curious – need to be taken into account in fundraising activities, because someone being targeted may not agree they have much to spare.
But we also suggest that under-giving by the rich might be due to a lack of empathy, rather than meanness or financial illiteracy. As Rousseau suggested nearly three centuries ago, the lives of the rich are so far removed from the lives of the poor that they lack any common fount of shared experience:
“Why are kings without pity for their subjects? It is because they count on never being human beings. Why are the rich so harsh to the poor? It is because they do not have fear of becoming poor.”
If accusations of lack of empathy seem harsh, a more sympathetic approach suggests that genuine money anxieties are evenly distributed across the spectrum of wealth. A psychological study of motivation by Dr Terri Apter of Cambridge University found it is not uncommon for even very rich donors to feel anxious each time they give. She writes,
‘Typically there’s the man who has a sinking feeling in his stomach every time he makes a large donation… It’s the split between the reality of being rich now – but still having that self-image or those impulses that a not-rich person has. [They think], “Maybe tomorrow, given the markets and the exchange rates and property prices, this is going to look very stupid.”‘
Given the current economic crisis, perhaps we can sympathise somewhat more convincingly with anxious billionaires, even whilst we use this research to shore up our efforts to encourage them to start, or expand, their philanthropic activities.