Passing the buck to the wealthier: reference-dependent standards of generosity

Organizational Behavior and Human Decision Processes

Marketing

Organizational Behavior and Human Decision Processes 2020 Vol 157 p 45-56

Berman J Z;Bhattacharjee A;Small D A;Zauberman G

Jonathan Berman

2020

Who is expected to donate to charity, and how much should they give? Intuitively, the less financially constrained someone is the more they should give. How then do people evaluate who is constrained and who has money to spare? We argue that perceptions of spare money are reference-dependent with respect to one’s current self: those who earn more than oneself are perceived as having an abundance of spare money and thus as ethically obligated to donate. However, those higher earners themselves report having little to spare, and thus apply lower donation standards to themselves. Moreover, a meta-analysis of our file-drawer reveals an asymmetry: individuals overestimate the spare money of higher earners but estimate the scant spare money of lower earners more accurately. Across all incomes assessed, people “pass the buck” to wealthier others (or to their future wealthier selves), who in turn, “pass the buck” to even wealthier others.

Charitable giving; Spare money; Resource slack; Financial decision making

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