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Social Science Research Examines The Generosity Of The Wealthy
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Social Science Research Examines The Generosity Of The Wealthy

Social Science Research Examines The Generosity Of The Wealthy

Social Science Research Examines The Generosity Of The Wealthy
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Self-made billionaires are bigger philanthropists than those who inherit their wealth, research says. That might explain why the self-made wealthy plan to donate much of their wealth to charity.

RENEE MONTAGNE, HOST:

A handful of people won a lot of money last week in that monster Powerball, and now they might be thinking of giving some of it to charity. Our David Greene spoke with NPR social science correspondent Shankar Vedantam about the generosity of the wealthy.

DAVID GREENE, BYLINE: Mark Zuckerberg recently announced that he plans to dedicate the vast majority of his Facebook wealth to philanthropy during his lifetime. Now there are a lot of questions about exactly what that means and how he would distribute the money, but many people applauded that announcement. And then a couple days later, NPR social science correspondent Shankar Vedantam stumbled on some new research looking at the generosity of wealthy people like Zuckerberg, and he's here to talk about it. Hey, Shankar.

SHANKAR VEDANTAM, BYLINE: Hi, David.

GREENE: So somebody's doing research into generous billionaires. That's interesting.

VEDANTAM: They are, David, and it's based on a clever observation. A lot of the billionaires who've made their name as philanthropists, people like Zuckerberg, are self-made billionaires. An economist in Ukraine recently noticed the same pattern in his own country.

GREENE: Ukraine - what, is there something special about Ukraine?

VEDANTAM: Well, the economist happened to be in Ukraine, but what's interesting is that many people in the former Soviet Union who've gotten rich very, very quickly over the last few years - Tom Coupe noticed that the folks signing up to give away their money have usually been the people who've made it in their own lifetimes. He was curious whether self-made billionaires are more generous in general than billionaires who've inherited their money. He analyzed the charitable donations of billionaires and found that self-made billionaires tend to make larger gifts. He also analyzed the Forbes billionaire list to see whether people had signed something known as the giving pledge, where many of the world's wealthiest people have publicly committed to giving away the majority of their wealth to philanthropy. Here's Coupe.

TOM COUPE: When I computed the statistics, I found that self-made billionaires are four times more likely to have signed the giving pledge than billionaires who inherited their money.

GREENE: OK, suggesting there that self-made billionaires - people who've made their own money, not inheriting it - are more generous. I mean, couldn't there be other explanations here?

VEDANTAM: Well, Tom Coupe actually looked for many other explanations. Along with his colleague Claire Monteiro, he looked at the possibility, for example, that the giving pledge was launched by Bill Gates and Warren Buffett, self-made billionaires. And it could be that if self-made billionaires hang out with other self-made billionaires...

GREENE: In a club, so to speak.

VEDANTAM: ...In a club and not with the billionaires who've inherited their money, it could be that these in-network connections might explain the findings. But even after controlling for these factors, Coupe and Monteiro find self-made billionaires tend to give away more of their money than billionaires who've inherited their wealth.

GREENE: OK, well, then if we accept this, Shankar, why is it?

VEDANTAM: Well, one possibility, David, is that self-made billionaires simply have different spending patterns in general. Coupe finds some support for this idea by analyzing the spending patterns of various billionaires. Here he is.

COUPE: Self-made billionaires are more likely to have private jets or expensive art collections or their own yachts. So maybe self-made billionaires just spend more money in general.

GREENE: Oh, so just spending more in general - on philanthropy, but on lots of other stuff for themselves as well.

VEDANTAM: That's right. There's also potentially a more interesting psychological explanation, David. People in general want their children to grow up to be like them. And it could be that self-made people want their children to grow up to be self-reliant. So there might be psychological reasons why self-made billionaires want to give away more of their money to philanthropy.

GREENE: Holding it back from their kids because the message is, you make the money on your own, you'll be a better person, like me.

VEDANTAM: Exactly. Now, it's also possible that self-made people are simply more confident about making money, so they have less trepidation about giving it away and spending it because they know they can always go out and make some more.

GREENE: So an obvious implication here - if you're looking for donations for a cause, I mean, and you're going to rich people, go to self-made billionaires before people who've inherited their money.

VEDANTAM: That's exactly right, David. There's also a policy implication here. If you want to encourage philanthropy, you might want to encourage people to give away their money in the first generation because once they pass on the money to a second generation, it's much less likely to go to philanthropy.

GREENE: All right, that's Shankar Vedantam, who regularly joins us to talk about social science research. He is also the host of a new podcast that explores the unseen patterns of human behavior. It is called HIDDEN BRAIN. Shankar, thanks, as always.

VEDANTAM: Thanks, David.

(SOUNDBITE OF SONG, "BILLIONAIRE")

BRUNO MARS: (Singing) ...For when I'm a billionaire.

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