Charity Begins At The Margin

A friend of mine is a prominent member of a philanthropic business. The idea behind the organisation is very simple. They sell clothes along with the principle that you should commit an act of random kindness to a stranger each time you wear them. Profits finance charitable projects, large-scale ‘arks’.

Their objective is to enable a positive culture shift towards every-day charity, with the founder and all the employees motivated to join the company by their desire to make the world a better place. So how does charity shape up as an economic motivation?

Altruism can be explained by evolutionary psychology, as a system of ‘generalised reciprocity’ – like an insurance policy. The society would be more likely to thrive and survive if misfortune for one member could be smoothed by charitable transfers from other members of the group, but with the knowledge that you were safe from destitution if you suffered some bad luck too.

Thus, humans rationally evolved to reward altruism. What impact does this have on our society? Firstly, individuals engaging in charitable activity receive different rewards to conventional entrepreneurs. Rather than receiving profits in accordance with the value they create for consumers, they receive praise from their peers – not to mention the positive feeling that they are making the world a better place.

People reward altruism by looking upon the perpetrators more favourably, and this creates incentives for philanthropy. Of course, the recipients can’t recompense suppliers of charity in the traditional manner (payment through the price mechanism). Thus, granting social status to honor altruism is directly analogous to giving money to the poor – They can’t pay for the goods and services they need, so you are ‘paying’ instead.

Thus, you should always remember your part to play in provision of charity. By praising members of our college community who give time to SVDP, you are helping the poor. By lauding Suas volunteers, you are making a difference in the lives of the world’s poorest people. Who knows? It might make voluntary work seem so attractive, that perhaps one more person might think it worth their while to join the Voluntary Tuition Programme. That makes the world a better place.

Of course, there are costs when we reallocate social status because it’s fundamentally a zero-sum game. If people reward charity by looking upon the individual more favourably, there is less ‘social status’ to go around and less to be gained in other ways. When these alternative means of achieving social status (being funny, looking attractive, etc.) yield lower returns for the investor, they are going to invest fewer resources (time, effort, etc.) in striving for them. Basically: why bother trying to be the funniest guy in the class when Johnny Do-Gooder gets all the girls? Better to spend that time and effort elsewhere.

So a philanthropic society that rewards altruism may end up being less funny, less smart, and more ugly than a self-interested Hobbsian wilderness. This author thinks that the charitable society is preferable, and will look upon you more favourably if you agree.

Republished as “Charity begins at the margin” in the University Times (10th of March, 2010).

Please note: As usual, the opinions contained herein are representative of the author only. They have been altered slightly since initial publication in order to avoid misrepresentation.

© The Free Marketeer 2010

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7 Responses to Charity Begins At The Margin

  1. James McLaughlin says:

    By taking an evolutionary approach to this you commit yourself to exploring the issues in a more wholesome approach than just ‘societal appraisal’ and ‘self-interest’. Analysing the psychology and economic impacts of charity and altruism require deeper analysis (Maslow etc).

    “Of course, there are costs when we reallocate social status because it’s fundamentally a zero-sum game”. This is not true. Once again, evolutionary economics would suggest that society (and its complexities) are not a ‘zero-sum game’ but a continuous improvement in our survival techniques- hence the extra ‘room’ for this is created (in the same manner as economic growth).

    The whole point of the evolutionary approach is to recognise increasing complexities of the human condition and its motivations. In one of the most complex issues that our world presents- such a simplistic analysis adds no value or insight.

    On a less intellectually pretentious level: ‘Thus, you should always remember your part to play in provision of charity. By praising members of our college community who give time to SVDP, you are helping the poor’ lacks any grounding in economic reality and this respondent is disappointed that it can be justified by the author as sufficient responsibility of the educated in a forum of social commentary.

  2. thefreemarketeers says:

    James:

    Sorry if the short article isn’t as exhaustive an exploration of the issues as might have otherwise been the case, but that wasn’t really my intent. I would simply hope that the piece prompts people to think about the subject matter, and offers them an interesting view-point. I would therefore disagree with you and hope that at least some readers derive some value or insight from the (admittedly) simplistic analysis. However, I wouldn’t claim to be widely read on the topic, which is why I welcome comments from those such as yourself who perhaps are (and who could, for example, explain why Maslow’s writings are relevant). In response to your remarks:

    – Firstly, the context of your quote was that ‘social praise’ is a zero-sum game. You can’t be elevated above your peers unless your peers are demoted on the ladder. Of course, this is just one interpretation. I think you’re suggesting that social status can be ‘created’ somehow in other ways, but I don’t quite understand or can’t imagine how this is the case without further explanation?

    – Secondly, I was NOT claiming that this is the ONLY means by which the educated (or uneducated, as I don’t distinguish) can discharge their responsibility to pursue social justice [e.g. If I explained how donations to a certain charity alleviated suffering caused by the recent Haiti disaster, that’s very different from advising readers to ONLY contribute in that manner]. I was simply elucidating one method by which individuals can (and perhaps should, if you’re interested in making normative declarations) contribute. You say that my interpretation has no grounding in economic reality, and you may be right. But I would welcome a more substantive explanation of why this is the case?

  3. thefreemarketeers says:

    Ronan:

    It was not my intention at all for this article to be condescending, and (although I don’t yet understand why it is) my sincerest apologies to you if it offends you in any way.

    The piece was inspired by your work, but that was simply used as a platform from which to discuss voluntary altruism generally. Thus, it was only the introduction that is meant to refer to your activity specifically. I am unsure which of my statements were false assertions (regarding your magnanimous motivation to join the company, altruistic intent of the company’s founder, charitable use of the business’ profits, or philosophy that you’re selling to consumers along with the product?) and am happy to clarify/remove any of them at your request. Thus, I have merely removed specific reference to the company so that there is no undesired misrepresentation. Please be assured that my remarks were made in earnest and in good faith, based on what I thought to be a solid understanding of those few aspects.

    Some quick remarks:

    – I have simply assumed the individual’s altruistic intrinsic desire to engage in charitable work, without delving too much into where this comes from (as no more was sufficient for the analysis). The focus on more ‘selfish’ motives that incentivise charity does not denigrate the former or elevate the importance of the later. It was simply the topic of my discussion. Maybe this clarifies the situation?

    – The intellectual frame-work I’ve described passes NO remarks on the competitive environment in which your organisation operates (i.e. to achieve consumer support and sales, or to secure capital for the expansion of the business), or the rigor with which you pursue your business objectives.

    – – –

    Finally, I would hope that my understanding of how brands and businesses economically work is sufficient to engage with topics such as this is a meaningful, non-trivial manner. Given how few of my comments were on that topic though: I would consider your closing remarks to have been a disrespectful, ad hominum attack.

  4. thefreemarketeers says:

    Ronan:

    Thanks for clarifying. I can see why you would take issue with that particular sentence, although it was nothing but ambiguous in my mind. When I wrote it, I was referring to that which you PERSONALLY gain from the company. If you abandoned the ethos of the firm, all those profits would accrue to the owners’ bank accounts.

    But they don’t: instead those profits go elsewhere towards your arks, while you and Cameron are motivated by other incentives. It was absolutely NOT my intention to imply a lack of profits, nor the absence of economic incentives to maximise profitability. To my mind, what you plan on doing with those profits is entirely up to you.

    Anyway, glad to have cleared it up! Don’t worry about the last remark, just glad that you weren’t annoyed.

    Best,
    Jonathan

  5. James McLaughlin says:

    Free Marketeer,

    “Sorry if the short article isn’t as exhaustive an exploration of the issues as might have otherwise been the case, but that wasn’t really my intent. I would simply hope that the piece prompts people to think about the subject matter, and offers them an interesting view-point.”
    Point very much taken and accepted. I was merely pointing out that evolution (both in hard and social sciences) depends on gradually increasing complexity as its cornerstone and that an economic self-interest model fails to grasp the more complex and intriguing reality. I won’t get into Maslow here (mostly because I am not an expert either) but I do think that a more holistic analysis would have provided greater insight into the motivations of altruism. I’m not entirely sure what evolutionary economics and psychology would have to say about my approach- it would certainly be an interesting follow-through and I would like to see it addressed if the author has time/motivation to write another article on the subject? Something along the lines of ‘Are there deeper economic motivations for altruism than self-interest?’ Purely for my own self-indulgence (and non-altruistic reasons) of course :)

    “Firstly, the context of your quote was that ’social praise’ is a zero-sum game. You can’t be elevated above your peers unless your peers are demoted on the ladder. Of course, this is just one interpretation. I think you’re suggesting that social status can be ‘created’ somehow in other ways, but I don’t quite understand or can’t imagine how this is the case without further explanation?”
    I realise that my point above was badly argued. Looking at it again I would dispute that social status is not the same as social regard- and that, although interlinked, the merits of one individual’s private contribution do not add to their social ‘status’ but their (non-zero sum game) social ‘regard’. (Think of it as a game-show where the additional ‘societal kudos’ points are provided by the increasing potential of society rather than being provided by say, Jonathan committing an Act of Random Malice “ARM”). Either way (and of course I do see both arguments), it would be subjective in the extreme and so individual’s differing levels of ability to hold ‘status’ or ‘regard’ (both from others and for others) could never be really aggregated into even a theoretical cost-benefit analysis.

    “I was simply elucidating one method by which individuals can (and perhaps should, if you’re interested in making normative declarations) contribute. You say that my interpretation has no grounding in economic reality, and you may be right.”
    Again, point taken and thoroughly accepted- yet the tone of the article was what moved me to be sarcastic. I do however, believe that there is no evidence (hard or even intuitive) that backs up the claim that people are (or ever would be) altruistic (on an individual level) for ‘status’ reasons and I see it as a slightly skewed justification for praise of said individuals. Going back to the ‘zero-sum’ game, one could argue that by advocating such an approach there are costs of ‘advocating’ (ie. other issues become relegated in priority) and this is what led me to remark that I was disappointed. Of course, this one is a silly argument- but I hope you get my point.

  6. thefreemarketeers says:

    James:

    Interesting stuff. I decided to take the non-selfish motivations as given, either because they stem from evolutionary psychology (which I find fascinating, but of which I am not very well educated) or from some intangible, intrinsic happiness that individuals derive from being good (a less clinical economic approach, but something which I am loathe to disregard).

    How about this thought experiment: Consider two societies, one which is extremely religious and in which voluntary charity is the norm. The other has very low levels of civic engagement of this sort, and members of this society scarcely contribute to charity at all – Indeed, they actively mock those who ‘waste’ their time giving to the poor with no return. (They can either or both be subsets of more conventional societies). Is a RANDOM individual parachuted into these societies not more likely to be charitable in the former society, if we hold his innate altruism and goodness constant?

  7. James McLaughlin says:

    Free Marketeer:

    Likewise, very interesting stuff and I suspect our thought paths may be converging here.

    Absolutely I agree he would be more likely to be charitable in the first instance. Rather than using religion per se (because I believe it to be a rather curious divergence from our natural/logical evolutionary path- a programming error due to our cognitive limitations perhaps) I genuinely hope we arrive at a stage where the first society is the norm (and the motivation for such is simultaneously logical, non-selfish and more advanced along the evolutionary path). That would be a pretty decent world to be living in.

    So does societal ‘pressure’ have an influence? Of course. Is there evidence to show status rewards for such behaviour? I don’t quite see it intuitively, especially in the ‘zero-sum game’ context (but the increasing sophistication of our legal systems, and such foundations as ‘Bill & Melinda Gates’ or ‘Michael & Susan Dell’ may provide clues to suggest that status is indeed linked to altruism). On an individual level- is that same status reward the motivation behind altruism? Let’s hope it is not so simplistic as that.

    So where does the societal pressure come from then? Well I would guess that takes deeper analysis than either you or I have time for and takes in economics, philosophy, psychology, sociology, dare I say theology and of course, evolutionary biology! Anyway, let’s hope that the altruistic evolutionary ‘meme’ is something that is becoming more prominent. If that is the case, we could well be ‘arking’ our way into the year 3000 and Ronan/Cameron (I suspect Cameron given his superior looks) will be a modern-day prophet.

    So: visit http://www.arkhq.com to buy a t-shirt.

    We will ALL look on you more favorably :)

    On that note, better get off this blog and down the dole office- free money- cha ching!

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