Giving to Poverty Relief Charities : The Impact of Beliefs and Misperceptions Towards Income Redistribution in a Real Donation Experiment

Many Americans hold erroneous beliefs regarding the level of inequality in the United States and the efforts the federal government makes to alleviate poverty. In general, they overestimate the extent of poverty relief undertaken by government. Given that poverty relief programs are a public good and likely underprovided, overestimation of the level of income redistribution is likely to exacerbate this under-provision by reducing giving to private-relief charities. This paper considers if this misperception does affect giving to poverty-relief charities. We report a real-donation experiment investigating links between contributions to poverty-relief charities and perceptions of federal transfers to low income households. We also ask participants to self-identify political affiliation, religiosity, race, and gender. We find that donations to our poverty relief charities are inversely related to the perceived transfers made to the poorest quintile. Donations are approximately $0.20 less for each $1,000 of perceived transfers. Interestingly, we find little correlation between giving and political beliefs