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People show more generosity when they have an 'unconditional gift of $10,000,' says study

In order to know just how generous people can be, a diverse group of people was given $10,000 and asked to use it however they wished to.

People show more generosity when they have an 'unconditional gift of $10,000,' says study
Representative Cover Image Source: Pexels | Karolina Grabowska

Self-interest has long been considered a central pillar of the capitalist economic system. The idea that individuals, whether butchers, brewers, or bakers, primarily strive to make a profit rather than act out of charity has been a cornerstone of economic theory for generations. However, recent years have seen a shift in this perspective, with researchers from psychology and behavioral economics challenging the notion that humans are solely driven by self-interest.

Representative Image Source: Pexels | Karolina Grabowska
Representative Image Source: Pexels | Karolina Grabowska

As per Psychological Science, a paradigm shift has emerged, shedding light on the generosity inherent in human nature. Studies have shown that people across various cultures, including children and even some non-human ancestors, exhibit acts of generosity. This transformation has also permeated the field of economics, leading to a rejection of the traditional view of "Homo economicus" as purely rational and narrowly self-interested. While evidence supporting human generosity has been primarily derived from controlled experiments in laboratory settings, a fundamental question remains: To what extent do individuals exhibit financial generosity in real-world situations that carry genuine consequences?

Representative Image Source: Pexels | Karolina Grabowska
Representative Image Source: Pexels | Karolina Grabowska

A unique opportunity presented itself to explore this question when a diverse group of adults received an unexpected gift of $10,000 USD from two generous donors with minimal conditions attached. The study included 200 participants from low-income countries (Indonesia, Brazil, and Kenya) and high-income countries (Australia, Canada, the United Kingdom, and the United States). Surprisingly, the results revealed that even when the stakes were high, participants displayed remarkable generosity. On average, participants allocated over $6,400 of their windfall to benefit others. A significant portion, nearly $1,700, was donated to various charitable causes. This data suggests that human generosity prevails, defying the traditional economic model, even in real-world, consequential financial scenarios.

To investigate whether reputational concerns influenced generosity, half of the participants were asked to publicly share their spending decisions on X (formerly known as Twitter), while the other half kept their spending private. Interestingly, generous spending remained consistent across both groups, challenging the hypothesis that enhancing reputational concerns would increase generosity.

When examining various measures of prosocial spending, the results consistently contradicted the conventional economic model. Participants' behavior aligned more closely with the average amount donated in dictator games, indicating a selfless inclination. In a broader definition of prosocial spending, encompassing purchases benefiting others in various ways, participants allocated 68% of their windfall generously. Even in the most stringent category—donations to charity, offering no personal benefit—participants still devoted 16% of their money to acts of generosity. While receiving a $10,000 windfall is not an everyday occurrence, the implications of this research are profound. In the United States alone, approximately $36 trillion will be passed down to future generations as inheritances in the coming decades. A substantial portion of American households will experience wealth transfers at some point. This study offers hope by suggesting that this massive intergenerational wealth transfer could be directed toward the common good.

Representative Image Source: Pexels | Karolina Grabowska
Representative Image Source: Pexels | Karolina Grabowska

The research raises intriguing questions about how framing gifts and inheritances might influence their generous use. Collectively, these findings build on prior laboratory research, demonstrating that even in real-world contexts, humans exhibit substantial generosity. Moreover, the study underscores the potential for wealth transfers to generate significant positive effects in society, highlighting how a single act of generosity can inspire countless others.

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