The U-Shaped Charitable-Giving Curve

Abstract

Is charitable giving U-shaped in income? That is, do low- and high-income households donate a higher fraction of their income to charity than the middle class? Decades of correlational studies have found that the share of income given to charity follows a U-shape pattern in the United States, but scholars continue to debate whether the apparent U-shape is a statistical mirage, or accurately characterizes giving across the income distribution. We partnered with a real charity to conduct a charitable-giving experiment where relative endowments are revealed to participants. We experimentally verify that random placement in an income distribution causes a U-shaped giving-income curve. The U-shape observed in real-world data therefore is plausibly not spurious, but a real effect of relative economic status on giving decisions. JEL Classifications: C91, D31, D64, D91, H23