Americans give ~4%, not 2%

post by Denkenberger · 2019-11-03T19:10:13.012Z · score: 32 (12 votes) · EA · GW · 3 comments

Many EAs have cited the statistic that ~2% of US GDP goes to charity. However, we usually refer to personal giving as a percent of pretax income (adjusted gross income or AGI in the US). If you add up all the pretax income in the US, it was only $10.9 trillion out of the GDP of $19.5 trillion in 2017, or 56%. This is because growth in retirement accounts is not taxed (and you avoid tax on a Roth IRA at the end and on a regular IRA at the beginning). Other adjustments include tuition, alimony, etc. Also, there are many benefits that are not taxed, such as medical, life insurance, employer contributions to retirement, etc. Also, there may be other parts of the economy that would not be potential income at all. This would mean people in the US donate on average about 3.6% of the pretax income. Here is a graph that shows a synthesis of many different studies of charity. You can see there is quite a bit of variation, but I think it is broadly consistent with 4% of pretax income. Perhaps less certain is the conclusion of a U curve where the lowest and highest income people give the greatest percentage.

Though of course it will be different (and generally lower) in other countries, I think it is useful to have a comparison for things like One for the World, Giving What We Can, and current EA giving [EA · GW].

Some EAs also have goals of consumption after charity related to a mean or median consumption. For instance, US mean per capita GDP was $60,000 in 2017, but mean per capita AGI was only $36,000. In the US, the median appears to be approximately two thirds of the mean, so that would imply a median AGI of about $24,000 per capita (though this source has a broader definition of income which comes out to $32,000 per capita median). This is also relevant for happiness studies; not only do we need to be careful about whether it is household versus individual income, but whether that income is AGI or includes other things such as benefits.

3 comments

Comments sorted by top scores.

comment by Stefan_Schubert · 2019-11-03T22:44:55.439Z · score: 5 (3 votes) · EA · GW

Thanks. The graph you link to (the sentence that starts "Here") is interesting. (I take it that this is the one you mean?)

Possibly you could have highlighted that more in your post.

comment by Denkenberger · 2019-11-04T05:46:50.502Z · score: 2 (1 votes) · EA · GW

Thanks - I wasn't sure it was OK to reproduce it.

comment by Sanjay · 2019-11-04T21:28:47.324Z · score: 1 (1 votes) · EA · GW

Those interested in this sort of data might also be interested in seeing this compared internationally. I often refer to CAF for this; they produce a World Giving Index.

Here's a link to the 2018 report. Unfortunately their data on giving money is based on the proportion of the population that gives, rather than the proportion of gdp or total salary given.