Thursday, February 09, 2006


When Lionel Luthor told the son:
"Altruism is not in your blood, Lex. Believe me."
I was stunned. Somehow my mind brought me back to the day when I was struggling to model altruism in into a paper I was working on -- and gave up. What is altruism? Most people associate the term with something about morality. Many economists have come to believe that even altruism (as opposed to egoism) can enter into one's utility function. That is, even when someone engages in a altruism-spirited act, he or she is actually doing it for his or her own self interest. Hence the birth of oxymorons like "egoistic altruism" or "egocentric altruism". One seminal paper along this line is of course Becker's Rotten Kid Theorem.

Assuming Lex Luthor represents a rational man, who of you thinks Lionel was right? When you give charity, or do good deeds in general, what do you expect? What do you feel?

While I do believe that many altruistic acts are driven primarily by people's belief in some moral value (religion, etc), I can't deny that there's always a slightest "warm glow" feeling involved...

Think about Soros' charity foundation. Many if you, I was told, partly blame Soros for an economic crisis that hit Indonesia some years ago. Assuming you are right. Do you think his foundation was built out of pure altruism? I guess you don't. No self-interest whatsoever? How about the Gates' foundation? Rockefeller? I hear whisperings: "They do it for ... profit", "Don't trust them...", "They're mean capitalists...". Now, let's look at here, in our own home. What do you think of TV7's "Rejeki Nomplok", or RCTI's "Uang Kaget"? Do I hear whisperings?

Lionel might be wrong. Altruism can be in everybody's blood. But even altruism can add to your own utility the way self interest does...



  1. Inequality aversion has been modeled as U(y1, y2) with Y1 as money/commodity own by self and Y2 as income/commodity own by other people.

    Assuming (at least, quasi) convexity in utility function, the more equal distribution the higher utility will be.

    JR Behrman in Oxford Economic Papers at 1988 is a good reference. Also this paper by Andrew E. Clark.

    The higher the weight of other people's income/utility in one's total utility then the higher is the rate of altruism of that person.

  2. I'm afraid the technocrati tagging provides more nuissance than organization. You get load of other texts when you follow the tag-link :( ....

  3. Berly, for our visitors, say that in "english", please? :-)

    Blogowner, oops sorry about that. Will tell the manager. Or, anybody could help, please?

  4. Sorry for the technical jargons, I am currenly attending a general equlibrium micro course that use the venerable Mas-Colell. As Krugman noted, only few grad econ students can write when entering and those few loose the ability after 1-2 years.

    Translation for my previous comment:
    Economist like to say that people do something to maximizing utility (=happiness).
    Standard economic analysis only calculate a person own income/wealth and things he/she could buy with it as cause of utility/happiness.

    But in reality a person could be happy if another person (especially close friend/relative) experiencing an increase in income. The higher an increase of other people happiness/utility/income increase my happiness then the higher my level of altruism.

    Example: I am happier if my brother got a salary raise (just for the occasion, excluding my happiness of getting some free dinners )

    Its about time this kind of non-self wealth/income to be included in formal and rigourous economic analysis.

    For interesting recent works on altruism, check this paper (
    explainaltruism_abst.html) and this paper (
    01-10-059.html) by one of my Prof.

  5. English or Martian I think Berly must have meant that the utility function is (quasi)concave or the preferences are convex.

    In plain English 'convex preferences' means variety is better, averages are better than extremes, a little bit of everything is better than a glob of one thing.

  6. Thanks for the correction.
    Hope I dont make the same mistake on the next month's exam :-p