David R. Henderson  

Altruism, No Regard for Some Others, or Belief in the Tooth Fairy

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I gave a talk yesterday at a Fraser Institute event in Toronto. The luncheon speaker, neuro-economist Paul Zak, did a great job talking about oxytocin and its role in our systems. He started out beautifully, contrasting Thomas Hobbes's view of life in Leviathan with Adam Smith's view in The Theory of Moral Sentiments. He asked "Who here got in a fight today?" His point, of course, was that we live in a very peaceful society in which life is not, a la Hobbes, "nasty, brutish, and short."

(In writing this post, I checked the bio of Thomas Hobbes. Interestingly, although his own life might have been nasty and brutish, it was not short. I would love to live that long.)

Zak had some great evidence, which you can find out more about by checking the link to his TED talk.

He did give some evidence, though, that does not support his view of altruism even though he thinks it does. Fortunately, I don't think his case rested only on this particular evidence, but it's important to point out what's wrong with this evidence from experimental economics.

Zak told of experiments in which one stranger, being given an endowment of $10, could, by giving another stranger money, cause that stranger to get 3 times that amount. So, for example, if Stranger A, given a choice to give money to Stranger B, gives $2, Stranger A winds up with $8 but Stranger B winds up with the $2 plus an additional $4 provided by the experimenters. Over 90% of people in stranger A's position, he said, give something. He regarded this as evidence of altruism.

But is it really? Steven Landsburg, many years ago, explained why it's not.

So I'll give Steven's explanation in my words, and add one more possibility. As Steven pointed out, that extra $4 came from the experimenters. So Stranger A is giving up $2 to cause B to get his $2 plus $4 from someone. If he hadn't given up the $2, then that someone would have kept the $4. So wouldn't a person with altruistic motives have a little regard for that someone paying the $4. I can see why giving $2 to Stranger B, with no additional implications, is altruistic. Although even there, it's a funny kind of altruism: you don't know whom you're helping. Stranger B could be someone poor or someone rich, someone deserving or someone undeserving.

But I don't see why costing the experimenter $4 to give that $4 to stranger B is altruistic.

Interestingly, Paul Zak, in laying out this experiment, and adding another component--once Stranger B gets the money, he can give some, and many do give some, to Stranger A--actually said that A and B could get together and take advantage of the experimenter. "Let's take his money." That's strong evidence against the idea that Paul Zak himself believes that Stranger A is altruistic.

Of course, you might argue that Stranger A understands the context and understands that the experiment will run until the money in the research grant is exhausted. So Stranger A is really not costing the experimenter anything. (In fact, it may save the experimenter time because the money will be exhausted more quickly.) But then Stranger A is causing future people who would have been experimental subjects not to get that money. So even here, it's hard to see altruism.

There is one more possibility. Stranger A imagines that the experimenter is the Easter Bunny or something similar. Or, to put it in economic terms, Stranger A imagines that there is no scarcity. But that's certainly not cause for celebration.


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COMMENTS (6 to date)
BC writes:

David's last paragraph and the last paragraph of the Landsburg article both make the same important point: A very plausible explanation for the observed behavior is that people don't give much, or even any, thought to where the "extra" dollars come from. In turn, that suggests that popular support for various government spending programs that "help" people may be higher than the public's "true" preferences. (Basically, the public may support *some* programs at least *in part* because they falsely act as though the money appears out of nowhere.)

I notice that the Landsburg article was written in 2001. In the intervening 15 years, have people suggested nudges and other corrective measures to deal with this behavioral anomaly, i.e., to account for the likelihood that perceived support for social programs is higher than actual support? I ask this question because I know that people that design nudges and study behavioral irrationalities say that it's really important that policy account for and try to correct those irrationalities. This effect would seem like something that would really concern them.

ThomasH writes:

Perhaps B is an economist who thinks that A has the chance to play a side game against nature which will create $4 of wealth net.

blink writes:

Here is a fix for Landsburg's criticism: There are three apples (or other good). The choice is whether to take one and send the others to the trash or give all three to the other person.

This approach is more in line with work by Falk and Szech. When they wanted to test morals, for example, they put the lives of real mice in the hands of the subjects.

Brian writes:

"But I don't see why costing the experimenter $4 to give that $4 to stranger B is altruistic."

David,

Both you and Steve propose that stranger A is ignoring the effect of taking $ from the experimenter. But there is an alternative explanation. The experimenter has already made clear that he/she is willing to part with the money. We don't know why, but can reasonably assume that the experimenter views giving away money as an increase in his or her own utility (why else would the experimenter do it?). Consequently, stranger A is attempting to maximize the utility of both stranger B and the experimenter by giving some money to stranger B. Since this is done at a cost to him/herself, the act is altruistic (and doubly so).

Charley Hooper writes:

It is important to remember that much of this type of "evidence" is artificial.

When I was in grad school, we did some similar types of experiments. All of the participants knew the situation was artificial, the rewards were relatively insignificant, and the sooner we finished, the sooner we could leave or move onto another topic.

Felipe Araujo writes:

David,
You're right in pointing out that sending money to a total stranger is an uncommon form of altruism.
However, the experiment you described is not meant to measure altruism at all! In the experimental economics literature it's known as the "trust game", and it's supposed to measure levels of trust and trustworthiness: how much money Player A initially sends is the measure of trust, and how much money Player B sends back is the measure of trustworthiness. Clearly, the best-case scenario is for Player A to send $10, and for Player $B to send half back, so each gets $15. But note that this outcome requires a good level of trust on part of Player A, and trustworthiness on part of Player B.

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