Sunday, September 7, 2014

Is your altruism a scarce resource?

jacket image for What Money Can't Buy by Michael SandelIn What Money Can’t Buy, Michael Sandel argues that markets and market values have come to govern our lives as never before. He suggests two reasons why we should be worried about this: fairness and corruption.

He is concerned about fairness because the distribution of wealth matters more when money is able to buy things that were previously available free of charge to individual consumers. I don’t think this argument gets to first base because the main examples cited – quality of medical care, quality of schooling, the ability to live in safer neighbourhoods, the ability to avoid queues, the ability to avoid socializing with poor people – are things that wealth has always been able to buy.

The “corruption” issue has to do with the possibility that our attitudes towards the good things in life may change when we put a price on them. In other words, some good things are degraded or corrupted when turned into marketable commodities. One example the author cites is blood donation. He refers to a study by Richard Titmuss which suggested that purchase of blood by commercial blood banks in the US had tended to displace voluntary donation. As blood came to be viewed as a commodity that was bought and sold, this apparently had a corrosive effect on norms of altruism.

Does this matter? I think it does matter when a government decides to provide a service which displaces the efforts of unpaid volunteers and voluntary money contributions. In that instance norms of altruism are displaced by coercion, since the government services have to be paid for from tax revenue. 

Situations can also arise where commercial activities displace services previously provided by unpaid volunteers and voluntary money contributions. However, commercial suppliers would need to be seen to have considerable merit, in terms of value for money for services offered, to succeed in markets dominated by voluntary activity. I find it difficult to see a case for preventing commercial suppliers from attempting to compete in sectors currently dominated by voluntary activity. And I also find it difficult to see a case for preventing people from making monetary contributions to charitable organisations rather than donating their time, if that is what they would prefer to do.

Sandel takes exception to the views presented by economists - such as Dennis Robertson, Kenneth Arrow and Lawrence Summers – who have argued that the altruistic motive should be treated as a scarce resource that should be relied upon only where the market system breaks down. He seems to be particularly upset by Summers’ view that we should save our altruism for our family and friends, “and the many social problems in this world that markets cannot solve”.

Sandel draws attention to Aristotle’s argument that virtue is something that we cultivate with practice. He suggests that altruism is like a muscle that develops and grows stronger with exercise.
That seems to me to be beside the point. Humans also develop intellectual skills through exercise, but still seem to insist that their intellectual skills (human capital) should be treated as a scarce resource.

Perhaps this is an appropriate time for me to make a personal confession. My altruism is definitely a scare resource. While I can see merit is developing my altruistic muscles, my desire to do that tends to evaporate when I feel that my efforts are being wasted. My time should not be treated as a free good, just because I choose to donate it.

Now, it is possible that I hold that view because I am an economist and have spent too much time over the last 50 years, or so, thinking about the opportunity cost of time. But I suspect that many non-economists hold similar views.

Would you be as willing to donate your time to good causes if your altruism was not viewed as a scarce and valuable resource? 

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