Studying Giving Behavior in the Real World
In analyzing this article, we are focusing on the effect an amount of money has on an individual’s decision to donate money charitably, and whether vastly increasing or decreasing this amount would actually change the givers behavior. What was determined through the study was that the starting amount an individual had did vastly impact the way they gave to charity, both in quantity given and in the giving strategy employed. While those on the lower end of the income distribution gave based on what they saw as a reasonable proportion of their overall total wealth, in contrast wealthier individuals gave based on what they saw as a reasonable set amount of money, regardless of what proportion of their total wealth that donation made up. This reflects that as the amount of money you have gets larger, the easier it is for even a small percentage of that money to seem like a significant charitable gift, even though it might only be a small fraction of your total wealth. On the other end, we can observe that people on the lower end of the income distribution may feel that the monetary number amount itself isn’t sufficient enough and feel pressure to instead devote what they know to be a more significant proportion of their total wealth, as compared to wealthier individuals.
As the author points out, the extent to which we could model real world individual giving behavior is blurred heavily by the fact that charitable donations are influenced and spurred on by a plethora of factors. Instead, as we have learned in part in class recently, studying what people will give to others in the real world can be modeled fairly well in the Ultimatum and Dictator games. Firstly, the ultimatum game models a giving situation in which both parties have some power over the decision – after player 1 gives an initial split they think player 2 will accept, player 2 must still decide whether they will accept the proposed split or not. This does not quite accurately describe the charitable donation scenario as someone donating has all the power to determine how much they will donate in the real-world situation. In contrast, the Dictator game involves a scenario in which after proposing a determined split, player 1 still has all the power because player 2 must accept whatever amount they are given without contesting. As a result, this article points out the connection of the dictator game to real world giving in charities because an individual can actively choose to donate nothing if they so desire, and their giving is (almost always) based sheerly off personal generosity rather any form of personal gain (like in the ultimatum game). Furthermore, our results from the Dictator game study directly reflected our previously discussed notions about giving among poor and rich populations: “it appears that for small amounts, dictators are focused on appearing to give a reasonable percentage of the money. For larger amounts, they are more focused on whether the amount of money looks reasonable”.