Economics Imperialism And Its Discontents: Altruism Edition

Family, by Mary Cassatt [Public domain], via Wikimedia  Commons

 As we've observed before, economists are famous for their calculated pose of mystification when it comes to activities we all recognize as ordinary parts of human life -- you know, like caring, playing fair, voting, etc. etc.

And it's not news that one of our human aspects that doesn't fit obviously into the economic toolbox is altruism. The economic agent is self-interested. Altruist people are other-interested. It's a real poser.


You might think that the differences doesn't matter much because economic modeling is about what we do in marketplaces, and in markets people pretty much are self-interested, or something like that. I'm a little skeptical myself -- but it doesn't even matter, because this easy-going, commonsensical answer isn't even the one people seem to be going with.

No -- instead we have "economics imperialism," which self-consciously attempts to use economic methodology to analyze all aspects of human life -- crime, family life, love, sex, you name it. It's "imperialism" because it's intended to colonize the other social-explanatory disciplines, like sociology. The idea of "economics imperialism" is to use the economic model of human behavior to explain and understand everything. Or, as the NYTimes "Economix blog used to say, "Explaining the Science of Everyday Life."

Before we get to the main point, let me just say briefly that the the epistemic and explanatory difficulties seem to me to be vast. Just for starters, consider this. The economic approach is supposed to be "scientific," relying on human behavior and observables and avoiding analysis of murky subjectives like mental states etc. But how is this supposed to work in explanation? Suppose someone does a surprising thing. How can you know whether a) they were behaving irrationally in trying to satisfy an unsurprising set of preferences or whether b) they were behaving rationally in trying to get to satisfy a surprising set of preferences? You always have one equation and two unknowns.

But whatever. Our theme for today is something different, to do with the massaging of preferences so they can be both self-interested and altruistic. You might think "altruism" means caring for others at your own expense. But in his canonical work on the economics of family life, Gary Becker proposes a definition in terms of utility functions: altruism is when one person is made better off by another person being made better off. E. g., a parent's altruism for a child is understood as the parent having some set of preferences such that when the kid does better the parent is more satisfied and thus better off. So -- as we get to below -- it's not really caring "at you own expense" at all.

You might put it by saying that "self-interested" doesn't mean "selfish": A's preference for B to prosper is "self-interested" in the sense that A will do better when B does, but it's not selfish, because it is, in some sense, other-directed.

So far so good. Becker goes on to derive a huge range of "theorems" based on his approach -- like the "Rotten Kid Theorem," which posits that an altruistic parent will (should?) structure incentives in the family to make selfish kids behave in ways that do not harm the interests of other family members. For example, if you promise to apportion your inheritance to your kids in accordance with their needs, siblings will be incentivized to help one another out  -- lest they get left out of the will because all the money went to the brother who never finished school and lives in a cardboard box or whatever.

Observations:

1) In Becker's approach, every family situation considered consists of one altruist and a bunch of selfish kids. That is, there is no way to model a family with more than one altruist, which means there is no way to even talk about any of the vast number of life contexts in which there are two or more adults who care about one another.

There's a reason for this. As I said, the book is full of theorems. If you have more than one altruist you have multiple interdependent utility functions, and all the cool-looking and intimidating math stops working.

At one point Becker suggests a "wife" could be modeled as one of the "selfish children," but you don't even need this level of ridiculousness to see the problem: the whole thing rests on avoiding the state of affairs many people most desire, of equal persons in a loving and reciprocal home.

2) If an altruist gives something up in order for their target to prosper, you might think the altruist is worse off and the recipient is better off. But in Becker-land, you'd be mistaken! Indeed, since they're both acting in accordance with their preferences, how can you deny they're both better off? That would violate some fundamental economic assumption or other of what economic "well-being" is. 

Becker says the altruist is better off in the sense of receiving "psychic income" for her pains. It's a funny choice, no? You got the car, but I got the "psychic income," so ... we're good, right?

It's weirdest if you imagine it among equal adults who live on intimate terms. If one is altruistic and the other is a selfish bloodsucking vampire, there's no problem with the distribution of goods: they each got what they preferred, after all. According to the model, things are working efficiently and thus well.

3) You know how sometimes when there's a nicer business that tries to do a little altruism or do-gooderism or at least exhibit a bare and basic kind of community spirit, and it's surrounded by bigger and meaner businesses that take a more cut-throat, remorseless attitude, and the nicer business ends up having to take its little business lunchbox and go home?

Well as I reckon, if you use the economic model to analyze interpersonal altruism, you're going to get the same result. Imagine you're the baby bear of altruisism -- just right! -- but you're surrounded by bloodsuckers -- the "ticks" of modern society, if you will. Every time you engage with these people, you'll get a little more psychic income and they'll get a little more ... whatever selfish and self-oriented actual thing they want is. Money -- or food, or attention, health, prestige, etc.

Where will it end?



I'll tell you where it'll end. Eventually you'll be lying there stuffed full of psychic income, but the cupboard will be bare, and you won't be able to afford antibiotics, and you'll die of some easily preventable disease.

Someone may have tried to tell you that economic theories don't have moral implications. Those people were lying.