Background
Altruism, defined as selfless concern for the well-being of others, challenges the standard economic assumption that individuals act purely out of self-interest. This entry explores the concept, its role in economic theories, and how it fits within different economic frameworks.
Historical Context
The contemplation of altruism in the economic context arose in response to observations of human behaviors—such as charitable donations—that seemingly provide no direct personal gain. This challenged classical and neoclassical economic models that emphasized self-interest as the primary motivator behind decision-making and utility maximization.
Definitions and Concepts
Altruism entails actions that benefit others at personal cost. In economics, it raises a paradox: if altruistic acts increase the utility of the doer, then they no longer appear truly selfless. The challenge lies in reconciling altruistic behavior with the axioms of self-interested rational choice.
Major Analytical Frameworks
Classical Economics
Classical economics traditionally does not account for altruism, emphasizing instead the invisible hand of self-interest driving market outcomes.
Neoclassical Economics
In neoclassical economics, altruism poses an anomaly to the concept of homo economicus, the model of humans as rational and self-interested agents. Despite this, models have been developed to incorporate utility derived from selfless acts.
Keynesian Economics
Keynesian economics focuses on aggregate demand and its effects on the economy. While it doesn’t directly explore altruism, government interventions and social welfare can be seen as institutionalized forms of societal concern akin to altruistic principles.
Marxian Economics
Marxian economics considers altruism in terms of social and communal values conflicting with capitalist interests. Altruism embodies the collectivist ideals that contrast with individual accumulation and profit maximization.
Institutional Economics
Institutional economics examines the role of institutions and social norms in moderating behavior, including altruistic acts nurtured by cultural or social expectations.
Behavioral Economics
Behavioral economics provides insights into altruism by examining psychological factors and motivations beyond mere utility maximization, lending credibility to the existence of altruistic behavior within rational frameworks.
Post-Keynesian Economics
Post-Keyesianism, with its focus on real-world pragmatism and institutions, acknowledges that altruistic behavior can impact market dynamics and social stability.
Austrian Economics
Austrian economics emphasizes the subjective nature of utility, allowing for altruistic behavior if it is seen to enhance individual satisfaction, even if indirectly.
Development Economics
In development economics, altruism can play a role in understanding how social policies and international aid impact welfare and economic outcomes in less developed regions.
Monetarism
Monetarism is less concerned with individual behavior, focusing instead on the macroeconomic aggregates such as money supply. However, it does not explicitly negate the possibility of altruistic actions within economic agents.
Comparative Analysis
Altruism significantly impacts economic models by introducing variables of non-selfish motivations. Comparative analysis of different economic theories demonstrates a spectrum of how altruism can be incorporated, from being a peripheral anomaly to a central behavioral consideration.
Case Studies
Studying charitable donations, volunteer work, and other altruistic actions provides empirical data demonstrating the limitations of traditional economic assumptions centered solely on self-interest.
Suggested Books for Further Studies
- “Altruism, Welfare and the Rationality of Human Behavior” by Charles E. Scott
- “The Altruism Equation: Seven Scientists Search for the Origins of Goodness” by Lee Alan Dugatkin
- “Philanthropy and the Dynamics of Change in East Asia” by David W. H. Lu
Related Terms with Definitions
- Utility: A measure of satisfaction or happiness derived from consumption or actions.
- Rational Choice Theory: The hypothesis that individuals choose actions that provide the greatest benefit and satisfaction.
- Public Goods: Goods that are non-excludable and non-rival in consumption, often leading to discussions about altruism in their provision and maintenance.
