by Robin Upton
Thu Jul 26th, 2007 at 04:09:33 AM EST
Let me take you back to EC101, a 1st year university course on micro-economics. After a brief oral introduction, the lecturer got down to business with a list of traditional assumptions. He asked rhetorically "OK, are we happy with that?" as he wrote each one up on the board, casting a token glance back to us, the audience. `Everyone is only interested in their own welfare', he wrote and then did a double take after seeing a hand waving at him from the back of the room. Embarrassed and taken aback, he asked me what the problem was.
"But I'm not entirely self-interested," I barked back, "I have friends that I care about. Why should we assume something we know to be wrong?"
His reply was as straightforward as it was uninspiring "Well, we have to assume that, otherwise we can't do economics". EC101 was a small but compulsory part of my degree, so since he was going to mark my exam, my token act of resistance (and my interest in conventional economics) finished there. By the time of my second degree I had studied quite a lot of game theory, and forgotten the obvious (obvious, that is, to the unschooled) point that people do not behave as self-maximisers, which came as a shock to me years later when I read about the ultimatum game and reconnected with the wisdom of my former years. (more below)
From the diaries (with format edit) ~ whataboutbob
I have watched sadly as the business studies techniques I had learned for manufacturing have been applied to areas for which they were never intended. `Quality control' or `value added' for school kids? `Measurable targets' for the spiritual growth of churches? The dreary reductionist logic that treats people as self-interested, atomised, amoral agents was applied seemingly without a thought about its validity or even to its consequences. Was it my imagination, or were people actually starting to behave more selfishly, in accordance with the economic models? There is nothing new in the suspicion that
the Economists' assumption of self-interest may be a self-fulfilling prophecy.
By 2004 I had the problem in focus. Is it really true that economics and altruism don't mix? How irrational is it to care about people around you? What would happen if, rather than ignoring the human propensity for generosity towards others, we attempted to model it? Might that, too, act like a self-fulfilling prophecy and encourage people to behave better? These were the questions that lead me to create altruistic economics.
A little introspection suggested that I have as many different propensities for altruism as I have relationships - so a system of modelling altruism had better have a concept of personal relationships. Even this initial insight takes us outside the realms of any of the traditional economic models of which I am aware. There is no central marketplace where all the economic agents meet, there's a network, like WWW, over which they do interact with one another. The network of care is the one of the basic elements of altruistic economics, the second is that of sympathy.
At that time I was looking after my grandmother, who had pretty severe Alzheimer's. If I had been so inclined I could have easily helped myself to a lot of money from her account without fear of discovery. Homo economicus, the selfish maximiser, would of course have been so inclined. With the power to move money between us at will, I was indifferent between transfers of wealth between us. I was uninterested in gaining £1 if the cost to my granny were £1 (or over). Conversely, I would be willing to spend up to £1 to save her an expense of £1 (since I could claim the money back any time). Call this a relationship of strength 1, I decreed. At the other extreme, what about someone for whom I had no altruistic feelings? If I would not be willing to give up anything for them to gain £1, the logical value to assign for strength of relationship (which I later termed `sympathy') was 0. The rest of altruistic economics follows from these assumptions.
That was of course an unusual situation, but life is full of similar scenarios. If a friend rings you from a cellphone and asks you to call him back because it's costing him a lot, would you do it? If your brother asks you to help out by babysitting for him? If your mum wants you to come over and tidy up the garden for her? Almost everything we do impacts other people, and - aside from autistics - we have a natural tendency to weigh up the outcome not only in terms of the impact on our own welfare, but in terms of our joint wellbeing. We consider the impact on others and on our relationship with them. Such a tendency is entirely healthy, natural and as it should be. What is not healthy, natural or as it should be is a system of economics which equates autism with rationality, that treats altruism as an irrelevance that can be safely ignored.
