Revealing the impact of individual income inequality on different types of charitable giving in China through social interactions

Abstract

AbstractObjectiveThis study delves into the correlation between individual income inequality as measured by the relative deprivation index and charitable giving, while also examining urban–rural heterogeneity. Additionally, it further explores the mechanisms by which online and offline forms of social interaction operate in this context.MethodsUtilizing data from the 2014–2020 China Family Panel Studies, we employed several methodologies including Probit regression models, cross‐model average marginal effects difference testing based on bootstrap method, instrumental variable method, and the Karlson–Holm–Breen (KHB) effect decomposition method.ResultsThe findings reveal that individual income inequality measured by the relative deprivation index significantly reduces charitable giving among Chinese households. The inhibitory effect of individual income inequality on social charitable giving is higher than that on charitable giving directed toward friends or colleagues. Furthermore, this impact exhibits some heterogeneity between urban and rural areas. Mechanism analysis indicates that the adverse effect of income inequality on charitable giving operates through reducing social interaction, including both online and offline forms.ConclusionOur results demonstrate that income inequality has distinct adverse effects on two types of charitable giving and explain the mechanisms underlying these effects through social interaction. A pattern of the differential mode of association similar to “ripples” in Chinese society is beneficial for understanding these differentiated impacts. We believe it is necessary to improve economic inequality conditions and enhance the enthusiasm of the Chinese public for participating in charitable donations by promoting various forms of social interaction.