Inequality, Social Distance, and Giving

Nicolas Duquette and Enda Hargaden

No 2018-03, Working Papers from University of Tennessee, Department of Economics

Abstract: This paper demonstrates that economic inequality has a negative, causal effect on prosocial behavior, specifcally, charitable giving. Standard theories predict that greater inequality increases giving, though income tax return data suggest the opposite may be true. We develop a new theory which, incorporating insights from behavioral economics and social psychology, predicts when greater inequality will lower charitable giving. We test the theory in an experiment on donations to a real-world charity. By randomizing the income distribution, we identify the effect of inequality on giving behavior. Consistent with our model, heightened inequality causes total giving to fall. Policy agendas that rely on charitable giving and other voluntary, prosocial behaviors to mitigate income and wealth inequality are likely to fail.

Keywords: Inequality; charitable giving; social distance; lab experiments (search for similar items in EconPapers)
JEL-codes: C91 D31 D64 H23 N32 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2018-07
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-hpe, nep-ltv, nep-pke and nep-soc
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http://web.utk.edu/~jhollad3/RePEc/2018-03.pdf First version, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ten:wpaper:2018-03

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