Nudging the Wealthy

Like most people, one of my pet peeves is the declining politeness of American drivers:  you let someone into a long line of cars or pull out from a parking lot and wait for the thank you wave that most likely doesn’t come.  A little act of kindness that could easily be reciprocated, but goes unacknowledged.

A call from a local reporter prompted me to think about who I see as the worst culprits and led me to some old research by social psychologist Paul Piff and colleagues.  They observed hundreds of cars and drivers over several days as an actor pedestrian crossed the street in a pedestrian crosswalk.  Despite the fact that this experiment took place in a state that requires cars to yield to pedestrians in crosswalks, Piff found that almost 50% of the drivers of cars in the most expensive category did not stop for the pedestrian, while 100% of drivers in the least expensive cars did.

Piff and his colleagues have conducted other research—rigged monopoly games, watching how rich and poor spend $10 just given to them—that looks at the behavior of those who are, in real life rich, or are “made rich” for the sake of the experiment.  The findings from all of these experiments is the same:  there appears to be an inverse ratio between the extent of wealth a person has and her/his level of compassion and empathy.  As wealth increases, compassion and empathy go down and self-interest and feelings of entitlement go up.  They also found that the wealthier a person gets, the more s/he feels entitled to that wealth and prioritizes his/her interests over those of others.  It moved Piff to ask in a TedTalk, “Does money make you mean?”

Reading Piff’s work makes you wonder how we have the Rockefellers, Carnegies, Gateses and Buffets of the world, and all of the other wealthy and generous supporters of nonprofits and good causes.  According to the “The 2016 U.S. Trust Study of High Net Worth Philanthropy:  Charitable Practices and Preferences of Wealthy Households,” 91% of the 1,435 high net worth[1] donors they surveyed gave to charities in 2015.  (Sadly, this was down from the 95.4% who gave in 2011, and down even further from the 98.2% who gave in 2007.)  But these wealthy gave an average of $25,509 per high net worth household, compared to $2,520 given by households from the general population.

Clearly, these high net worth individuals are not lacking in empathy and compassion; they gave, on average, just under 8% of their income to charities.  Their giving is, first and foremost, driven by their personal values (77%) and they gave where they believed their dollars would make a difference (94.3%).  The vast majority (73.6%) made unrestricted gifts, despite the fact that only 29.4% said they preferred to give unrestricted gifts.  Giving unrestricted gifts, which we know are the hardest to get and the greatest statement of faith and belief in an organization, seems the antithesis to a lack of compassion and the prioritization of self-interest.

So, what is going on here?  Even an experiment of Piff’s showed that the wealthy are stingy, even with free money.  Using real people who were either defined by him as rich or poor, Piff gave each $10 and said they could keep it or share it, all or in part, with a stranger.  Those with incomes under $25,000, and some with as little as $15,000, gave 44% more of that money to strangers than the rich did, those making between $150K-$200K a year.  This is on par with the historic and consistent findings of those who regularly track individual giving:  those with lower household incomes give a greater percentage of their income to charity than do the wealthy.

If it is true that these are becoming even harder times for fundraising, it would be great to know what to do, where to look for money, etc.  Of the respondents in the U.S. Trust study, 55.1% said they will continue to give at the same level for the next three years; more than another quarter (28.2%) said they would increase their contributions.  And here is where other research by Piff can be of benefit.

The right messaging—what he calls “small psychological interventions”—can nudge people from selfish to empathetic, uncaring to the plight of others to finding their compassion for others.  It isn’t that the wealthy can’t be made to be empathetic, as the thousands of wealth donors prove, but simply sometimes they may need a bigger nudge.  In one experiment, he showed a 46 second video about children living in poverty and an hour later the wealthy were just as generous in their willingness to help a stranger as the non-wealthy.

Yet further proof that the prods we give our potential donors may just be the difference between receiving and not, even from the wealthy.

[1] In this study, high net worth was defined as a household with assets of $1M or more, excluding the value of the primary residence, and/or an annual household income of $200,000 per year.  This group, however, was much wealthier, with an average income of $331,156 and total assets of $16.8M.  Looking at additional demographics of this group:  60.3% of respondents were male and 77% white; 58.6% were baby boomers, with the remainder splitting almost equally between those older and those younger.