The economics of altruism - Eaglewatch by Joselito T. Sescon

October 21, 2016
Richard McElreath and Robert Boyd (2007), both professors of anthropology at the University of California, defined altruism as a behavior which reduces the absolute fitness (welfare) of the actor and increases the absolute fitness (welfare) of the recipient(s).
 
Way back in 1975, the famous American biologist Edward O. Wilson called on altruism as the central theoretical problem of sociobiology, the study of the genetic basis of the social behavior of all animals, including humans. Thirty years later in 2005, Science magazine ranked the evolution of cooperation, by which they mostly meant altruism, as among the “top 25 big questions facing science over the next quarter-century.” Today, the studies of altruism continue excitedly and spanning the social- science disciplines of psychology, economics, evolutionary science, biology and politics.
 
In everyday language, an altruist is someone who goes out of his or her way to help others. The biblical famous example of an altruist is the “Good Samaritan” who took pity and helped a man who was stripped of his clothes, beaten and left half dead by robbers on his way from Jerusalem to Jericho. In a little twist of this biblical story, James M. Buchanan, who won the Nobel Prize in Economics in 1986, wrote an essay in 1975, titled “The Samaritan’s Dilemma”. Technically, he wrote and analyzed a social problem deriving from the altruistic desire of a Good Samaritan to help a person in need, but may end up being exploited.

 

 

 
He cited increasing economic affluence as only one among many explanations for the pervasive phenomenon he called the Samaritan’s dilemma in 20th-century Western society. His hypothesis is that modern man has become incapable of making the choices that are required to prevent his exploitation by predators of his own species, whether the predation is conscious or unconscious.
It has been exactly four decades since Buchanan wrote the essay. Although it may not be popular nowadays to the new generation of economists, the essay has spawned many studies, both theoretical and empirical, providing analysis and solutions to the Samaritan’s dilemma. Most of the studies dealt with the problem in specific conditions frame in a two-person game theoretic model, such as foreign aid to developing countries and providing assistance to rural farmers. There are two parts in the most commonly proposed solution to the Samaritan’s dilemma that are not far from what Buchanan prescribed. The first part is public precommitment to the application of rules designed to punish and deter exploitative behavior. Such rules are likely to take the form of conditionality: assistance will be forthcoming only if the beneficiary agrees to conform to certain behavioral guidelines, and assistance will be cut off if that agreement is violated. The second part, as Buchanan mentioned in the original essay, is (Samaritan) delegating the power of decision to an agent, one who is instructed to act in accordance with the strategic norms that are selected in advance.
 
In other words, developing institutions locked in to strategic policy prescription and delegated with power to make decisions. The delegation to an agent is to prevent the exploitation of the altruist given his or her good intentions.
 
From current observations, we can see evidence of this two-part solution that are truly implemented in the likes of Conditional Cash- Transfer Programs, the local version of which is the Pantawid Pamilyang Pilipino Program of the Department of Social Welfare and Development; in the provision of aid to countries and communities; and practiced by international institutions, such as the International Monetary Fund, by setting conditions for countries in accessing standby funds to bail out ailing economies. All over the world, official development assistance, mostly from governments and multilateral institutions, were imposed with accompanying conditions coursed through delegated institutions probably in anticipation to the Samaritan’s problem. Yet, more than government and foreign assistance, there are far many charitable acts given and received among members of communities in societies without preconditions. For all these charities given and received, is there really no escaping the Samaritan’s dilemma? Is there another game that people play in giving and receiving charity? Are there generalized conditions where the beneficiary does not exploit the altruist giver?
 
Without doubt, the sciences will continue to study altruistic desires of animals and human beings. In fact, there are findings that in some conditions of giving and receiving help, acts of exploitation on the part of the recipient only happen if the nature of help given is a substitute to the receiver’s desire to help herself. In other words, it is always admirable to extend help, but it is better to know first what help exactly does the recipient needs to complement her desire and efforts to help herself. There are conditions that it is easy to know what help is needed, such as helping the dying man in the Parable of the Good Samaritan, but there are complex conditions also, such as providing aid to an ailing economy, or helping farmers and informal settlers, indigenous peoples, homeless families, among other marginalized and poor communities.
 
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Joselito T. Sescon is a lecturer at the Department of Economics, Ateneo de Manila University. He finished his MDE and MA Economics from the University of the Philippines School of Economics.

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