On Giving and Interpretting
How closely do you listen to the news?
Today while driving home from a holiday party, I was listening to NPR’s Marketplace Money by KQED. One of the pieces was talking about how lower income people are more giving than higher income people. My immediate question was, “by what measure?” Fortunately, the commentator was good enough to share that information — lower income people are more giving when measured as a percentage of their disposable income given away.
Well, that certainly adds some texture, I thought. I found this graphic (in this article) which shows a similar trend (this graphic is before tax income though, so the numbers are skewed a little more towards the poor):
What I personally notice about this is that each quintile actually gives more as a total amount than the previous quintile.
| Avg Income | Giving % | Giving Amt | Moving sum | % Of moving sum | % of total |
|---|---|---|---|---|---|
| Â $10,531.00 | 4.3% | $452.83 | $452.83 | 100% | 6% |
| $27,674.00 | 2.5% | $691.85 | $1,144.68 | 60% | 10% |
| $46,213.00 | 2.7% | $1,247.75 | $2,392.43 | 52% | 17% |
| Â $73,460.00 | 2.0% | $1,469.20 | $3,861.63 | 38% | 20% |
| $158,888.00 | 2.1% | $3,336.65 | $7,198.28 | 46% | 46% |
Indeed, another way to talk about this same data is that high earners (top 20% of income) give nearly half of all money donated each year, which sounds a lot different but is a true statement about the same data.
However, the NPR piece didn’t stop there. They next talked about a study where participants were given $10 and the opportunity to give away any amount of the $10 to another, anonymous, participant. I was npt able to quickly find supporting documents, but the claim was that lower income people gave away an average of $7, keeping $3 for themselves, while higher income people gave away an average of $3, keeping $7 for themselves. The interpretation again was that poor people are more generous and more likely to donate money than rich people.
Again, I thought about it a little differently. This effect shown is correlation and not causation, so the given interpretation is an example of the most classic mistake of statistics. Perhaps, I wonder, are people who are less giving naturally more likely to have high incomes? In other words, does causation go the other way? How would this hypothesis even be tested? And what are the confounding factors?
I try to listen to the news carefully and question everything I hear. In addition to the news just being wrong — in several cases where I’ve known more than what’s presented in a newstory, I’ve seen large omissions and fabrications — there are always alternate explanations and interpretations than the one assumed by the presentation. Despite trying, I still often find myself believing, on a whole, the news as presented by the media I consume.