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29 OCTOBER 2020
Do wealthy people deserve to be rich?
Based on research by Juliana F. Black and Shai Davidai
Amazon CEO Jeff Bezos, who is worth more than $145 billion and owns a $75 million private jet, is the world’s richest person.

But do people generally think Bezos, and other billionaires and multimillionaires, deserve to be that wealthy?

Management Professor Shai Davidai researches the idea of “deservingness” on the perception of wealth, and examines the mental calculations the public make to determine their view of a rich and successful person. In an article co-authored with Juliana Black of the New School for Social Research and published in Journal of Experimental Social Psychology, Davidai determines the role charitable giving plays on whether others perceive that the rich deserve their wealth.

“When we see someone who is rich, we want to know two things,” Davidai says. “How much money do they have and how did they get it”?

According to the research, how the rich spend their money creates a perception in people’s minds about whether they deserve their fortunes, no matter how they became wealthy.

In nine studies and two supplementary analyses, the researchers examine the judgements people make about how the rich acquired their wealth based on their spending habits.

“How you spend your money in the present is no indication of what happened in your past,” Davidai says. “But what our research shows is that people do treat it as an indication.”

Davidai and Black found that people tend to attribute economic success to hard work and competence when rich people give generously to charities instead of buying luxuries.

“I think charity is one strong way the wealthy are able to signal how they made their money, regardless of whether it’s true or not,” Davidai says. “It’s a way for the very rich to indicate, ‘I deserve this. I worked hard for this. Don’t worry about me.'”

In the paper, the researchers point out that Bezos has spent more than $2 billion establishing a foundation to combat homelessness.

Davidai notes that it is important to view “deservingness” through the cultural legacy of the Protestant work ethic, with its emphasis not only on hard work, but on frugality and charity.

“I think what happens is that people perceive charity and frugality and infer that a successful person must have worked hard,” Davidai says.

Davidai says the perception of the wealthy as hardworking, charitable, and virtuous also helps sustain the status quo in the economic system and makes it more difficult to address economic inequalities.

“Most people agree that if you work hard and accumulate wealth, you should keep a big part of that,” Davidai says. “Where we disagree is how much wealthy individuals should keep or be taxed. That amount is affected by whether we think their money is deserved.”
Davidai notes that when wealth is perceived as deserved, especially through public acts of charity, it helps perpetuate the system.

“If people think the very rich are undeserving, they might strive to change the system,” he says.

That’s part of the reason Davidai says he insisted on putting the word deserve in ironic quotation marks in the title of the paper.

“What our research suggests is that people might be asking the wrong question,” he says. “The right question should be, ‘What would make society function to the most benefit of the most people?’ Once we ask about deserving to be rich, our minds are going to be influenced by perceptions that are not necessarily correct.”
Source:

Columbia Ideas at Work
Columbia Ideas at Work is a bridge between business research and practice, offering key insights from Columbia Business School’s faculty in a format that is easily accessible to busy executives. Visit our website.

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