Economy · June 23, 2022

Why is it good to do good?

“It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner,” wrote Adam Smith, famous in The Wealth of Nations, “but from their respect for their own interest. We address not their humanity, but to their own love “.

True enough. Yet my recent experience is that there is a lot to be said for addressing not people’s self-love, but their humanity. I recently published a Twitter discussion telling people what I had in mind I explained that my father Adrian was dead. I posted photographs and described his life: his curiosity, his intelligence, his shy modesty. I recounted how my father had devoted himself to the care of my dying mother in the 1990s, and somehow withheld his work, kept his children from going to school and made sure there was food on the table. And I described the delicate care my father and mother had both received at Florence Nightingale’s hospice in Aylesbury. And finally, I asked people to consider giving money to the hospice.

People are nice, so I wasn’t surprised to get a warm response. What I didn’t expect was to receive anonymous three- or even four-figure donations. It felt like a lot of money to be given undercover to a local charity in a place you may never visit, in memory of a man you probably never met.

Economists have a number of theories as to why someone does charity. The most cynical – true at times, clearly false in this case – is that people are ostentatiously demonstrating their generosity and wealth.

At the other end of the spectrum is “pure altruism”. Just as rational consumers maximize their earnings as savvy shoppers by harvesting the best products at the lowest possible price, pure altruists also seek the greatest impact for their spending. The difference is simply that pure altruists aim to maximize the usefulness of other people. That doesn’t seem to cover it either. There’s a community of “effective altruists” out there, but they tend to prefer hard evidence, not commemorative Twitter threads.

Economists Dean Karlan and Daniel Wood have shown that there is a tension between evidence and emotion. They tested fundraising mailings with a heartbreaking story about a named beneficiary: “he has known nothing but absolute poverty for his entire life.” Others had the same emotional story alongside a paragraph attesting to the “rigorous scientific methodologies” that demonstrated the charity’s impact. Karlan and Wood found that some people who had previously made large donations came back and gave even more, impressed by the evidence of effectiveness. But smaller donors gave less. Apparently, the scientific evidence has turned them off.

Perhaps they were giving because of what economist James Andreoni calls the “warm glow”, and John List, another economist, calls “impure altruism.” Offering warm glows is motivated by a more fuzzy kind of altruism. Instead of calculating the most effective goal for our donations, we give instead because it’s good to believe we’re doing well.

Since giving warm light is emotional rather than rational, it raises the question of how to persuade people to get in the mood for giving. No one was better at this game than Charles Sumner Ward, who in the late 19th and early 20th centuries raised funds for the YMCA, Boy Scouts, Masonic Temples and other employers of formidable talent. of him.

Ward implemented tactics that now look very modern, including artificial deadlines, large donors who only pledged funds when paired with smaller donations, advertising stunts, a campaign clock showing progress towards an often arbitrary goal, and small wearable flags that i donors could show. Some of these ideas have been shown to increase donations, but social scientists keep wondering what makes people donate.

Cynthia Cryder and George Loewenstein found that tangibility matters. People donate more generously if they are first asked to choose a charity from a list rather than if they are shown the list and asked first to choose the amount of the donation, then to choose the charity charity to receive that donation. They also donate more if specific examples of projects the charity does, rather than a more generic description are given. Being able to clearly imagine how the money would be spent led people to open their wallets.

Perhaps this explains why people were so generous. I was very specific about my father’s life, my parents’ death, and how this particular hospice had helped them. Instead of giving to an abstract ideal, people were giving money to something they could clearly imagine.

Dean Karlan prompted me to consider something else: that people who regularly read my column or listen to my podcast are in a relationship with me, and my Twitter thread created an opportunity for them to mark that relationship. with compassion and generosity.

Whatever the reason, I am grateful to you. And if this column calls for a warm glow, indulge yourself. Find a charity that means something to you and give something in memory of someone who mattered to you. Altruism may be “unclean”, but doing good is good.

Written for and first published in the Financial Times on May 27, 2022.