How well can volunteering be explained by a naive economic model?

I should begin by defining what I mean by a naïve economic model. The naïve model I have in mind is a conventional neoclassical model, with a few bells and whistles added. The bells and whistles are necessary because so called ‘rational economic man’ who is the basis of conventional neoclassical economics doesn’t practice altruism. There are probably still some economists who claim that everything everyone does is for a selfish reason, but I am not one of them. While I recognize that a lot of people do a lot of noble things for their own satisfaction, I see no reason to doubt people when they claim to be motivated by altruism.


So, in terms of the naïve model I have in mind, the objective functions that individuals follow in making choices take some account of the well-being of other people (i.e. I am assuming interdependent utilities). That means that individuals might volunteer to do something even if they perceive that this involves some cost to their own well-being. The extent that they do this would depend on the net cost in terms of loss of individual well-being and the extent that their actions affect the collective benefit they seek to obtain by volunteering. The main potential source of net loss of individual well-being would be the value to the individual of opportunities foregone from use of time in volunteering, which would be offset to the extent that the individual obtains satisfaction from volunteering, or from recognition of her efforts. The effect of individual actions on the collective benefit being sought would depend on the size of the group seeking the collective benefit. In a large groups the actions of each individual tend make a small contribution to the objective being sought, so there would be a greater incentive to free-ride on the efforts of others.

The naïve model suggests to me that people would tend to volunteer to a greater extent when they had fewer opportunities for paid employment. It therefore suggests that volunteering would tend to decline if workforce participation increased. It also suggests that volunteering would be a substitute for other forms of charitable giving – people with time on their hands would tend to volunteer their time and people in well-paying jobs that give them little leisure would be more inclined to put their hands in their pockets to make financial donations. It also suggests that people would tend to volunteer to a greater extent in small, well-defined communities (e.g. country towns) where their efforts are more likely to be recognized that in major urban centres where individuals are more likely to get lost in the crowd.

How well does this naïve model explain volunteering in Australia? Not particularly well. The first point I noticed when I looked at the relevant section of the Productivity Commission’s recent report on ‘Contribution of the Not-for-profit sector’, is that there has been a consistent upward trend in rates of volunteering across all age groups over the last decade, although this has been offset to some extent by a decline in the average number of hours volunteered. This has occurred at a time when labour force participation has continued to increase.

As might be expected, ABS data show that volunteering rates are higher among women than among men. The difference is confined mainly to the 35-44 year age group – when most female volunteering could be expected to be associated with school canteens etc. People with young children are the group most likely to volunteer regularly, but they spend fewer hours per week volunteering than do people with older children and older people without children.

Again, as expected, the rate of volunteering is higher outside capital cities than within capital cities. But the difference is not huge. The rate for regular participation in voluntary work was 19% in capital cities and 23% outside capital cities in 2006.

The naïve model would not predict that employed people would be more likely to volunteer than unemployed people. For women, although those in full-time employment had the lowest rates of regular volunteering, those who were employed part-time had higher rates of regular volunteering than those classified as unemployed. For men, rates of volunteering for those in full-time and part-time employment were the same and higher than for those who were unemployed.

The most surprising departure from the naïve model relates to donations of money as a substitute for donation of time. I know such substitution does occur, but it doesn’t show up at an aggregate level in the ABS survey data. Volunteers are much more likely to have donated money or contributed financial assistance to someone outside the family in the last 12 months than non-volunteers.

In order to explain non-volunteering we seem to need a model of behaviour that recognizes that volunteers and non-volunteers have different personal characteristics. It seems that non-volunteers tend to have relatively weak links to the community in general. The evidence suggests that they are much less likely to have attended a community event recently. They are also less likely to agree with the proposition that most people can be trusted.

Other posts on volunteering:
This is the third in a series of post on volunteering. In the first post, Shona discussed her experience in a volunteer role in a community playgroup. In the second post I discussed some research on the determinants of volunteering.

What does research show about determinants of volunteering?

In the preceding post, What determines who volunteers?, Shona discussed her experience in getting parents to volunteer to help in running a play group. In this post I discuss some Australian research which suggests that volunteers fall into several distinct groups.


A paper by Sara Dolnicar and Melanie Randle, ‘What Moves Which Volunteers to Donate Their Time?’ uses data collected from a national survey of volunteer work conducted by the Australian in 2000 to segment the ‘market’ for volunteer work. The authors use motivations as a basis for statistical techniques that enable them to identify distinct subgroups of volunteers.

Six sub-groups were identified as follows:

• Classic volunteers are involved to do something worthwhile, gain personal satisfaction, and help others. They are older, less frequently active in the workforce, and very active in their volunteering efforts.

• Dedicated volunteers contribute the most hours per year to an average of six volunteering organizations.

• Personally involved volunteers appear to participate in volunteering temporarily, as long as (most probably) their child is part of an organization that relies on parental support.

• Volunteers for personal satisfaction and altruists (two sub-groups) are motivated by gaining their own satisfaction and represent the least distinct segments, with altruists doing the most work in the area of befriending and listening to people.

• Niche volunteers are young, new to volunteering, highly educated and state a variety of rather atypical reasons for volunteering, like feeling obliged to volunteer and having slid into volunteering rather passively, gaining work experience or as a result of religious beliefs.

These research findings are interesting but they don’t shed a great deal of light on the issues that Shona raised. The potential volunteers that Shona was most interested in would be in the ‘personally involved’ sub-group. The question is why some people become more involved than others.

Perhaps the people who are most involved are motivated, consciously or unconsciously, by the feelings they get from volunteering. Recent research findings suggest that it feels good to be good (but I am not sure that we needed researchers to tell us that).

It seems to me that human nature has evolved in such a way that people have a natural desire to contribute voluntarily to activities that are best undertaken collectively. If that makes sense then perhaps it would be more productive to try to explain why a substantial proportion of people are reluctant to volunteer. One idea that has crossed my own mind from time to time as a member of voluntary organizations is that I don’t want to be left ‘holding the baby’. (That expression might not be entirely appropriate in a discussion of volunteering in play groups, but for some reason I can’t resist using it.) It may be worth exploring whether people would be less reluctant to take on onerous voluntary roles if they had some assurance that they could readily pass them on to other members after a defined period.

What determines who volunteers?

This post stems from a discussion I had with Shona a couple of days ago. I had to admit that although I strongly support volunteering I don’t know much about it, or about the characteristics of people who volunteer versus those who free ride on the efforts of others.


Shona agreed to write this guest post about her experience in the hope that it might lead to further discussion of this important issue. Shona writes:

I’ve been involved in a volunteer role at my local playgroup for two and a half years now and over that time I have taken an interest in the types of people that volunteer compared to those that don’t.

The whole point of a community playgroup is that everyone pitches in and helps, thus keeping operating costs to a minimum whilst providing maximum benefit to the kids. There are parents and carers that take on more formal roles, key holders, treasurer, secretary and co-ordinator. But this in theory should simply provide other parents and carers a framework in which to enjoy playgroup. Simple game theory in practice – everyone contributes a small thing for everyone’s greater gain.

Every time someone vacates one of these formal roles, it is my job as co-ordinator, to fill them. I watch people, I see who comes regularly, I look at who pitches in. I also notice those that turn up late, leave early, and make sure they are no-where to be seen when help is required (we’re not talking anything major here, just cutting up fruit for morning tea, putting toys away, etc).

My approach is to narrow down suitable candidates; it is futile asking the group as a whole – no-one ever comes forward, in fact, if we were in a school yard, you would actually see a line of individuals take a huge theatrical step backwards. I approach people individually, quietly, and ask them if they would take on a small role. I think I have about a 30% success rate. The interesting thing is the dynamics of the group that says yes and the dynamics of the group that says no.

The people who I think will say yes can be described as follows. They have a child of an age where they are not clingy or over-dependent on their carer. They attend regularly, either weekly or more than once a week and know many of the other attendees. They have also been attending for more than 6 months and therefore know how the playgroup works. They attend both for their kids benefit, and their own – they have made friends and appreciate the adult interaction. They generally have good communication skills and have contributed more than their share during their visits.

Amazingly, after they say no (on the grounds that they don’t attend regularly), they stop attending as regularly as if to prove they can’t commit to something.

The people who do say yes surprise me every time. They often have two kids, the youngest usually new-born or very young. They are often new members, but do attend regularly, usually more than once a week. They don’t necessarily know how playgroup works but want to learn. I feel guilty accepting their gracious help – but I guess I am one of those people too.

In writing this, I realise it is quite clear cut. Those that have attended for a long period are used to free riding – why contribute? Someone else will step up. Those that are new aren’t aware of the free-riders, they want to contribute and make connections within the community. Finally, I suspect that the longer a person stays in any of the formal roles, the less likely other people are likely to step into those roles. Perhaps we should only have day-leaders (the face of those official roles) on a very short rotation.

My two years are up, it is time to move on, but any tips I can provide my successor (should I be able to find one), would be more than welcome.

What do NSW solar panel owners have in common with mining investors?

‘So you think I am a cranky old fool, do you?’ I knew it was Jim before I turned around to see who was talking. I referred to Jim as a cranky old fool on this blog a couple of weeks ago. At this point I should make sure readers are aware that this Jim is unlike any other Jim I have ever met. He is a royalist. He thinks incentives to put solar panels on roofs of houses are an abomination because the high costs of this method of generating electricity are borne by taxpayers and other users of electricity. And he asks difficult questions. A lot of the people I know avoid Jim when they see him coming. Perhaps that is why he sneaks up on people and just starts talking.


Anyhow, Jim isn’t such a bad old coot. He wasn’t even particularly upset with me for calling him a cranky old fool. After he had my attention, he said: ‘You know that photo of Sydney you have on your blog – the one with the cloud over most of it?’ I replied: ‘Yes, I’ve been thinking about replacing it with a photo I took on a sunny day, now that the dreadful Labor government has been swept out of office’. Jim said: ‘Don’t do that. Find a photo with a darker cloud!’

I was surprised to hear this from Jim. I had never thought of him as a Labor supporter. So, I asked him to explain. As I did so I couldn’t help looking at my watch. I knew I was about to be sucked in to a discussion that might take some time.

Jim asked: ‘What do you think of the decision of the New South Wales government to reduce the feed-in tariff that they will pay people who have installed solar panels?’ I said I didn’t have an opinion. I added that I thought the decision would make him happy because I remembered that he thought solar panels were an abomination.

Jim scowled and just asked another question: ‘What do you think of the proposed mining rent tax?’ I explained that I thought the latest proposal wasn’t quite as bad as the tax first proposed last year. I mentioned something I wrote last year explaining that the main problem was sovereign risk. I argued that when governments enter into agreements with mining companies they should honour those agreements whatever happens, rather than insisting on a higher share of profits because the price of minerals has gone up. I concluded my little speech by suggesting that if this tax is introduced investors will become more wary about signing any kind of agreement with any government in Australia.

Jim said: ‘That is precisely my point about the solar panels. The feed-in tariff specified in those agreements must be one of the worst deals that any government has ever made. But for a new government to just tear up the agreement is one of the lowest acts of bastardry that has ever been perpetrated on investors anywhere in the world’.

I agreed that the decision was dodgy but I said I didn’t think the rating agencies would downgrade the NSW government because of it. It might actually improve the finances of NSW. Jim said: ‘Look, you aren’t going to try to tell me that any investors should take any notice of the rating agencies after the global financial crisis. The real issue is whether anyone can be confident that the people running the NSW government at present are any more trustworthy than Jack Lang. Do you really think these people are more trustworthy than Jack Lang?’

Jim asks difficult questions. Jack Lang was the premier of NSW during the depression in the 1930s. One of the things he is remembered for is his efforts to stop payment of interest to overseas creditors until the financial situation improved in NSW. If he had succeeded this would have done enormous damage to Australia’s reputation as a destination for foreign investment. On the basis of recent performance I think the politicians running NSW at present and those currently running the Commonwealth government might default on interest payments if they had to deal with the kind of economic crisis confronting Australian politicians in the 1930s.

I told Jim that people would like him a lot more if he didn’t ask difficult questions.

Postsript: 7 June 2011

When I saw Jim this morning I asked him what he thought of the decision of the NSW government to honour their contractual obligation to people who had installed solar panels. Jim said he would have been more impressed if the Premier had made the decisions to back down because his conscience was troubling him rather than because he didn't have the numbers in the upper house to pass the legislation.

I suggested that in any case the cloud had lifted over Sydney and that I would find a better photo to put on my blog. Jim said: 'Don't do that! There is a new cloud over Sydney. They have decided to award the Sydney Peace Price to Noam Chomsky'.

I don't know who 'they' are, but if 'they' are interested in promoting peace 'they' should try to avoid provoking people like Jim.