Subjective ethical standards of generosity: Most feel strapped for cash, but believe higher earners are flush with spare money; higher earners report having much less spare money than what lower earners expect

Passing the buck to the wealthier: Reference-dependent standards of generosity. Jonathan Z.Berman et al. Organizational Behavior and Human Decision Processes, Volume 157, March 2020, Pages 46-56. https://doi.org/10.1016/j.obhdp.2019.12.005

Highlights
•    Subjective ethical standards of giving are reference-dependent with respect to the self.
•    Most feel strapped for cash, but believe higher earners are flush with spare money.
•    Higher earners report having much less spare money than what lower earners expect.
•    Higher earners are thus expected to donate much more than what they self-assess.
•    People are more accurate at assessing the spare money of lower earners than higher earners.

Abstract: 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.