Sharing one’s fortune? An experimental study on earned income and giving

Abstract

In this paper, we investigate the relationship between earnings and charitable giving, in an environment in which earnings depend on luck but not in a manner that makes its contribution obvious. We set up a real effort experiment, in which subjects enter data in four one-hour occasions and are paid a piece rate. From the second occasion onwards, we randomly assign half of the subjects to a treatment with higher piece rates, without the subjects being explicitly made aware of the random assignment into the two groups. At the end we ask subjects whether they want to donate a share of their earnings to a charity of their choice. We find that, despite large differences in earnings due to the different piece rates, subjects receiving the higher piece rate are actually less likely to give, and that givers in the two groups give the same share of their total earnings. Charities receive the same average donation from members of the two groups, indicating that charitable giving by subjects in this experiment does not increase with income. We discuss how these results can be explained by self-serving attribution bias.