Businessmen pass by Occupy Wall Street protesters at New York’s Zuccotti Park in 2011. AP Photo/Kathy Willens
Social scientists have long known that the rich are not exactly model citizens.
They evade taxes more often, flaunt traffic laws that protect pedestrians and donate less frequently to charity. In the aftermath of the Great Recession, there has been no shortage of reports in the popular media on their selfishness and opportunism.
This bad reputation, whether deserved or not, is not a recent phenomenon. Even the Bible tells us that “It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God” (Mark 10:25).
But are the rich really so different from the rest of us? In recently published research, we used a natural field experiment to try to find out.
Before we get to that, it’s important to look beyond the selfish behaviors mentioned above and consider the different incentives and opportunities faced by the rich that might lead them to make such immoral choices.
For instance, because rich people face a higher tax bracket, every dollar of income they hide from the tax collector benefits them more than it would a poor person.
Similarly, although both rich and poor get the same penalty for a traffic law violation, a fine that would be devastating for a person in poverty amounts to a pinprick for someone who’s wealthy. And while the rich are less likely to give to charity in any one year, they instead tend to make large gifts later in their lives.
So even if the rich often do behave more selfishly than the less well off, their behavior might be more the result of different circumstances rather than differing moral values.
Too tempting? Cash envelope via www.shutterstock.com
To suss this out, we designed a field experiment in which we “misdelivered” transparent envelopes with money to over 400 rich and poor households in a medium-sized city in the Netherlands. Returning envelopes is individually costly (mostly in terms of time) but benefits the rightful recipient, making this an altruistic, “pro-social” act.
All the envelopes contained €5 (US$5.34) or €20 as well as a card with a message from a grandfather to his grandson explaining the gift. We sent the money, however, in two variations: either as banknotes that could be easily seen by anyone handling the envelope, or as a bank transfer card, which is a slip of paper that orders a bank to send money from one account to another. In other words, the cash acted as “bait,” while the bank transfer card would have had no value to the individual.
Our setup had two advantages over other studies on the topic. First, participants did not know they were being studied as part of an experiment. They were, therefore, not changing their choices for fear of what we might think of them.
Second, there was no “selection bias” in our data that might have skewed the results because the rich tend to shy away from participating in experiments (possibly because they don’t have much time to participate or don’t like the idea of researchers having data on them). In our setup, every rich or poor household was randomly selected.
The overall results showed that the rich returned roughly 80 percent of all envelopes, regardless of whether it contained cash or a card. When cash was used, the rich returned only slightly less. So the rich were somewhat sensitive to the money bait, but not much.
The poor, however, were much less likely to go to the trouble of returning the money and were much more vulnerable to the bait inside the envelope. They kept roughly half of the noncash envelopes and roughly three-quarters of the cash envelopes.
Does that mean that despite their reputations as misers, the rich are actually more pro-social than poor people? And in fact, it’s the poor who are selfish?
Well, not so fast. Before drawing any conclusions about character, we need to return to the question of incentives we explored earlier.
One obvious difference in the incentives the rich and poor face is that the latter have a higher need for money. This easily explains why a poor person would be more likely to keep the cash envelopes.