I came across this article that said that rich people gave money to charities differently from the middle class and the poor. One difference was to whom they gave money. “The poor tend to give to religious organizations and social-service charities, while the wealthy prefer to support colleges and universities, arts organizations, and museums.”
But what interested me was another difference:
One of the most surprising, and perhaps confounding, facts of charity in America is that the people who can least afford to give are the ones who donate the greatest percentage of their income. In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income. The relative generosity of lower-income Americans is accentuated by the fact that, unlike middle-class and wealthy donors, most of them cannot take advantage of the charitable tax deduction, because they do not itemize deductions on their income-tax returns.
I can venture an explanation for this phenomenon and that is because of the difference between absolute values and percentages. It ties in with another issue that may seem puzzling, and that is why some restaurants impose a mandatory gratuity for parties above a certain size. This value is usually around 15-20% or so, not larger than what people normally should tip.
Why this is puzzling is that it is much harder to serve larger groups than smaller ones. If you have ever been to a restaurant as part of a large group you know that it takes forever for people to get their orders in because they are talking animatedly, they discuss with others what they are ordering, change their minds, and so on. Furthermore, large groups tend to linger much longer over their meals since it is a party and people don’t like to leave, and thus use up space that could go to other diners. So I could understand restaurants imposing a larger gratuity fee than usual (say 25%) for big groups. But they don’t. The fact that they ask for just the normal amount suggests that large groups tend to tip as a smaller percentage than an individual or a small group
This may be because if you are eating alone and your bill comes to (say) $20, then a 20% tip is $4 and does not seem huge and many people are willing to give that amount. But if you are entertaining a group of ten people and the bill comes to $200, then a tip of $40 may seem like a lot, and people may feel reluctant to give that, thinking that $20 is good enough, since it is five times what they would have tipped if they were eating alone
That same factor may also be at play with the charitable giving. As your income level goes up, the absolute value of the amount you give may become large enough that people become more reluctant to part with it and cut back, since the absolute amount they are willing to give seems already large to them.