Altruism: Theory and empirical Evidence Erik Hermann Anne-Kathrin Marsel May 17, 2010 Seminar: Inequality IBA Master Table of contents 1 Altruistic Behavior 1.1 Dictator Games 1.2 Altruistic Punishment and Rewarding 1.3 Reciprocal Altruism and Strong Reciprocity 2 Altruism and Inequity Aversion 3 Altruism & Income Distribution 3.1 Altruism in low-income Areas 3.2 Altruistic Parents: Raising Children 3.3 Limits of Altruism: Generosity vs. Altruism 4 Consistency of Preferences for Altruism and Framing Effects 5 Summary
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Altruism: Theory and empirical Evidence · 1.2 Altruistic Punishment and Rewarding 20 MU 20 MU 10 MU + informed about A‘s donation 10 MU (2) Experiment by Fehr et al. (1993) •
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Altruism:
Theory and empirical Evidence
Erik Hermann Anne-Kathrin Marsel May 17, 2010 Seminar: Inequality IBA Master
Table of contents
1 Altruistic Behavior
1.1 Dictator Games
1.2 Altruistic Punishment and Rewarding
1.3 Reciprocal Altruism and Strong Reciprocity
2 Altruism and Inequity Aversion
3 Altruism & Income Distribution
3.1 Altruism in low-income Areas
3.2 Altruistic Parents: Raising Children
3.3 Limits of Altruism: Generosity vs. Altruism
4 Consistency of Preferences for Altruism and Framing Effects
5 Summary
1 Altruistic Behavior
• “personal sacrifice in behalf of others” (Gintis et al. 2003)
• “act of giving up of value to improve the well-being of another” (Kamas et al. 2008)!
• human characterized by division of labor,
networks of exchange & cooperation
• cooperation in animal world restricted to kin selection
• existence of both: altruism & envy counterintuitive,
but certain mixture of both evolutionary stable
Definitions
Characteristics
1.1 Dictator Games
• game-theoretic viewpoint: no transfer by dictator
• But: altruism observable in multitude of experiments with
different experimental designs & recipient groups:
• rejection due to proponents’ assumption of high stake of punishers among
responders, higher offers & consequently benefit for all responders
• phenomenon of norm enforcement by individuals economically not affected
by violations
! Evidence via third-party punishing game: third party (punisher) informed
about transfer from dictator to recipient + opportunity of punishment by
stake of own endowment given
1.2 Altruistic Punishment and Rewarding
(1) Experiment by Fehr/Fischbacher (2003)
55% punishment, if less than half of dictator’s endowment transferred &
negative correlation of punishment (also expected by recipients)
(2) Experiment by Fehr et al. (1993)
10 MU 10 MU
Optional transfer by both
1.2 Altruistic Punishment and Rewarding
20 MU 20 MU
10 MU + informed about A‘s donation
10 MU
(2) Experiment by Fehr et al. (1993)
• assuming selfishness: no transfer of B independent of A’s donation
Conclusion
in 50% of the cases positive transfer by B & positive correlation between transfer of A and B
1.3 Reciprocal Altruism and Strong Reciprocity
Sociological viewpoint (Trivers (1971))
P(death of drowning man) = 50% P(death of rescuer) = 5%
• survival (death) of drowning man in case of survival (death) of rescuer
• in case of single/isolated event, no incentive for rescuer to help
• in case of change of roles & reversal of survival chances, profit for both of
risking their lives (reduction of 50% chance of dying to 10% probability)
Scenario generalized to community: selection of two individuals risking their lives over those facing risk on their own
1.3 Reciprocal Altruism and Strong Reciprocity
2. Age/reproductive value of organisms
1. Kin selection (even observable in former hunter-gatherer societies)
7. Failure to reciprocate (cheating): gross vs. subtle cheating
4. Number of reciprocal relationships (group formation)
5. Friendship/liking + sympathy/gratitude
6. Moral aggression (education/punishment of reciprocators)
3. Cost-benefit ratio of reciprocal altruism
1.3 Reciprocal Altruism and Strong Reciprocity
Test of strong reciprocity on the labor market (Fehr et al. 1997)
Contract offer by employer with certain wage & desired effort level
Possibility to accept by employee ! but not demanded to perform according to contracted effort level (no penalty for deviation)
1.3 Reciprocal Altruism and Strong Reciprocity
Test of strong reciprocity on the labor market (Fehr et al. 1997)
According to theory: zero-cost effort level by employee & minimum
wage to facilitate acceptance by employers
But due to reciprocity much higher wages & effort levels
2 Altruism and Inequity Aversion
• Assumption of transfers to individuals with in equitable lower economic
payoffs (comparison to reference group = crucial)
• linked to feelings of guilt + envy
guilt ! altruistic rewarding (individual better off than reference group)
envy ! altruistic punishment (attempt to penalize)
• Often transferred to inequality aversion (attempt to limit difference
between own payoffs and those of reference group)
• Cooperation in one-shot prisoner’s dilemma ! rejection of low offers in
ultimatum games, high punishment in third-party punishment game
3 Experiments on Income Distribution 3.1 Altruism in low income areas
Experimental Evidence Schluter, Wahba (2004)
! Give cash transfers to parents, conditional on regular school attendance of their children
! Examined expenditures
! Child related: clothing & toys
! Parental goods tobacco & clothing
! Household public good food
! Aiming to find evidence for parental altruism
! Results helpful for development of effective welfare programmes
Results
Interpretation
Found significant and symmetric positive effects on expenditure for boys‘ & girls‘ clothing
Insignificant impact on parental goods clothing & tobacco
! Strong evidence of parental altruism
Efficient design of governmental transfer programmes requires this knowledge
(I)
(II)
(III)
Evidence by Lindbeck, Nyberg (2006)
• Degree of parents‘s altruism defines norms of children
• Examining efforts of parents to instill work norms in their children
• Assumptions
(1) generous social insurance arrangements tend do weaken parents‘ initiatives to instill such norms in their children
(2) children with altruistic parents could free-ride if they fail on the labor market
• Inglehart et al. proved: European welfare states do not require „hard work“ as a quality especially for children to learn at home
3.2 Altruistic Parents: Raising Children
Non-monetary altruistic impacts
Social contacts
Emotional support
Control techniques
Work norms
Achievement motivation
Furnham (1990): attitude to work / unemployment correlates between parents and children
Impacts
Results
Altruistic parents‘ interest in instilling work norms depends on children‘s wages & parental income & ambitions to instill work norms ! rotton-kid theorem (Becker, 1974)
Concerning the influence of social insurance arrangements: (1) weaken the economic efforts to work and (2) lead to weaker incentives for parents to instill work norms
If failure in the labor market becomes more widespread, the perceived non-economic cost of failing declines (Modig & Boberg 2005) ! the more advanced a welfare state is, the less ambitions to instill work norms
(I)
(II)
(III)
Empirical studies by Wright (2000) about role and meaning of charitable giving in different countries & cultures