A recent study asked men and women what they’d do with an unexpected windfall and, in doing so, answered an age-old question. It turns out that women are indeed more generous than men, and now the science exists to prove it.
In a separate report, Professional Adviser quotes data from the Charities Aid Foundation (CAF) confirming that the UK’s richest 1% gave almost £8 billion to charity in 2023.
Keep reading for a closer look at the groundbreaking study and what role charitable giving could play in your long-term financial planning.
A university study found that women were around 40% more generous than men
In a study of more than 1,000 adults, participants were given €10 (£8.30) and asked how much they would like to share with a paired player, chosen at random.
The “dictator” – the one given the money – wasn’t aware of who they were paired with, or their gender, but they did know that their pairing would change once they became the recipient. In other words, whoever they gave a portion of their money to, the favour wouldn’t be returned.
On average, women gave away €3.50 compared to just €2.50 for men. That’s a 40% difference.
Moreover, the most frequent choice among female participants was to split the cash 50/50. For men, the most frequently arrived at decision was not to share any money at all.
A co-author of the paper, Professor Marina Pavan of Jaume I University in Spain, noted that there is little incentive for dictators in this experiment, given that the recipient is anonymous and can’t reciprocate.
“According to standard economic theory”, she says, “we would expect people not to transfer anything”.
While this is a positive reflection on human nature, some academics have a different take. They suggest that society expects women to be more generous, with greater negative consequences for not being. And that this in turn makes women more generous.
Either way, increased generosity has its knock-ons, both positive and negative.
The negative effects of the generosity of time, societal expectations gender gap
Back in February, we marked International Women’s Day with a series of articles. These included a discussion of ‘How financial advice can help to close the gender finance gap’ that highlighted (among other things) that women are:
- 36% more likely to be providing unpaid care than men
- 33% more likely to be providing unpaid childcare than men
- More likely to be working part-time (38%) compared to men (14%).
So, women are more likely to provide unpaid care and to work part-time, both of which are contributing to the gender pay gap and the gender retirement gap, too. Lower wages might mean you don’t become auto-enrolled or that you have gaps in your National Insurance record.
The same societal expectations that see women giving their time to look after children and elderly relatives – with a negative impact on their careers and retirement – could be responsible for greater generosity too.
Long-term financial planning is key here. At Jane Smith, we might not be able to overhaul societal gender disparities, but we can help you bridge the gaps in your own finances. We can help with everything from simple budgeting to long-term retirement planning and goals-based and risk-managed investment. Be sure to get in touch if you have any questions or if you need our help.
Giving while living, charitable donations and the increased tax efficiency of generosity
In the “dictator-recipient” experiment, there is nothing to be gained by sharing wealth, other than the warm and fuzzy feeling that comes from a good deed done.
You can take that feeling into your financial planning too. In fact, many of the UK’s wealthiest already do.
Professional Adviser quotes data from the Charities Aid Foundation (CAF) confirming that the UK’s richest 1% gave almost £8 billion to charity in 2023. Giving while living is a tax-efficient way to pass on your wealth, leaving a legacy while you’re still around to see the benefit the money does.
As well as passing on wealth to family members, you might opt to donate to charity. You can do this throughout your life or in your will.
You can do the latter using a:
- Residuary legacy, to leave the whole or a percentage of your estate to a chosen charity, once all other bequests have been made and costs paid.
- Pecuniary legacy, allowing you to bequeath a specific sum of money to a cause you care about. This is one of the simplest and most popular ways to donate to charity.
- Specific legacy, which requires you to be specific about exactly what you are donating and to which charity.
Not only are gifts to charity free from Inheritance Tax, but they could also lower the rate you pay. Gift 10% or more of your estate’s value to charity and rather than paying IHT at 40%, your liability will be subject to a reduced rate of 36%.
You’ll have the warm and fuzzy feeling that comes from generosity and supporting a cause you care about, and it’s tax-efficient too.
Get in touch
If you’re looking for an independent financial adviser in Milton Keynes or Olney, look no further. At Jane Smith Financial Planning, we’ve been helping clients for 30 years, so contact us at info@janesmithfinancial.com or call 01234 713131 to see what we can do for you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
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