The Hindu Business Line : Limits to altruism

Altruism does not come naturally to human beings. It depends on the incentives on offer, social norms and the effect of being observed. The donor’s expectations are also a factor, says P. V. INDIRESAN.

Most human beings are not totally altruistic; they have some expectations before they give.

While writing my previous article, where I offered to contribute from my savings to a rural transport project, I happened to be among a group of rural development experts. Their reaction to my proposal to elicit donations was mixed. Some felt that I will be flooded with offers of help, while others were sceptical. I received more than the usual share of responses to my article. But none offered any assistance. At that stage, I happened to pick up the recent book Super Freakonomics by Steven Levitt and Stephen Dubner. That book has a chapter on apathy and altruism which I found quite interesting.

ALTRUISTIC TENDENCIES

The authors describe two experiments called Ultimatum and Dictator, conducted by two economists Vernon Smith and Daniel Kahneman. In either case, there are two players whom they call Annika and Zelda. In Ultimatum, Annika gets $20 and is instructed to give any amount from zero to 20 to Zelda. Zelda is free to either accept the offer or reject it. If she rejects it, Annika gets nothing but if she accepts, Annika retains the balance.

In the experiment, Zelda usually rejected any offer below $3 as too trivial and thereby punished Annika who lost everything. On an average, Annika offered $6 or more. The question is whether such an offer is altruistic? Perhaps not; Annika had something to gain, namely, the avoidance of rejection.

Dictator is a variant on Ultimatum in which Annika has full right to give either half the amount of $10 or only $2 keeping the remaining $18 to herself. It was found that three out of four Dictators divided the money evenly. These experiments were conducted hundreds of times in many cultures — from Africa and Western Mongolia to Chicago. The experimenters concluded that the concept that human beings were homo economicus was wrong and that they should better be described as homo altruisticus. No wonder the experimenters were awarded the Nobel Prize.

At this stage came a new economist John List, son of a truck driver, who by dint of his own exertions has risen to become a professor in the prestigious economics department of Chicago University. When young, List had to deliver goods to a warehouse. The local workers who were sitting idle did not help him and would not even lend their fork truck. So, he and his girlfriend (and his future wife) did the job manually. Hence, List was sceptical about altruism among humans and modified the Dictator game to check his suspicions.

He got volunteers to act as sellers and buyers of baseball cards. The buyer asked for the best card for $20 or for $65. It was found that most sellers (particularly out of town sellers) cheated by offering a card of lower value. In the next experiment, he told Annika that she could give Zelda whatever money she desired; or, take away $1. The results were startling. Only 35 per cent (half the number in the earlier experiment) gave any money, 45 per cent did not give any money at all and 20 per cent took away the dollar! Whatever happened to altruism?

List went further. Annika was told that Zelda had also been given a similar amount and that she could give whatever she liked or steal the entire money with Zelda. In this experiment, only 10 per cent gave away any money to Zelda, more than 60 per cent took away some money from her; over 40 per cent took away all of Zelda’s money. A bunch of altruists had suddenly transformed into thieves!

In the final version of the game, List made both girls earn $20 each by filling envelopes. In that case, two-thirds of Annikas neither gave nor took any money, while 28 per cent of them took money from Zelda.

EFFECT OF BEING OBSERVED

List concludes that, first of all, the experiments were biased. Those who did volunteer were likely to be “do-gooders” who tend to have a higher need for approval and are less self-serving compared to non-volunteers. Next, there is scrutiny by the professor in charge — who is recording the results and scrutiny has a powerful effect.

For example, in Newcastle-on-Tyne, Professor Melissa Bateson ran a clandestine experiment. On the coffee table, where the faculty were expected to pay “in the honesty box”, she put at times the picture of a flower and at times the picture of an eye. She found that her colleagues paid three times as much when the eyes were watching! Similarly, volunteers who were asked to play prison guards became so violent that the experiment had to be stopped.

List’s conclusions were:

There is bias in the choice of experimenters — if you are not a do-gooder you are unlikely to participate.

Scrutiny does have a powerful effect.

Human behaviour is affected by social context — incentives, social norms and previous experiences.

For instance, when a person pays $100 to the local radio station he may get a year’s free listening. US citizens are the world’s most charitable contributors — because the US tax code is most generous to donors. On the other hand, the US has far few organ donors — kidneys for instance — eventhough virtually everyone has one surplus kidney.

UNFULFILLED EXPECTATIONS

Then, how can we induce our people to donate or participate in rural development? On a hunch, I sent my article to some 50 of my acquaintances. Most were middle-class people who would have little to spare but a few did hold positions where they had some powers of patronage.

A couple did have their own money. I got about a dozen replies — much good advice and some help. A few passed my article on to others who, too, held some powers of patronage. Once again, I got polite replies. Two entrepreneurs did reply: One asked for more time and the other pointed out that he had paid a large sum to an IIT professor a few years ago on a promise his idea will take fruitf. Unfortunately, that was the last he had heard about that experiment.

We should probably conclude that most human beings are not altruistic but have some expectations before they give. That is fair enough. I offered my savings because I too expected a result — the fulfilment of a boyhood dream!

(The author is former Director, IIT, Madras. Response may be sent to indiresan@gmail.com and blfeedback@thehindu.co.in)

(This is 264th in the Vision 2020 series. The previous article appeared on November 2.)

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