On private charity and altruism

Abstract

If well-off persons were to voluntarily engage in significant transfers of income to the poor, the rationale and need for recourse to state measures to redistribute income and impose taxes would weaken. It is thus not surprising that a good many social scientists have been fascinated by private charity, which they usually explain is motivated by altruism.' This note looks further into the role of altruism in private charity demonstrating, first, that altruism can be consistent with no transfers from the altruists to the poor and second, that a special form of altruism 'a dose of mutual altruism' amongst the altruists suffices to ensure charitable transfers. Reference to means designed to bring about mutual altruism and their role in a number of empirical contexts concludes this note. Prior to proceeding along these lines a brief remark seems appropriate. A recurrent (and appropriate) reference is made to the act of transferring as such. For example, Roberts (1984) points out that if 'altruists receive utility from the act of transferring then private charity would be positive in equilibrium' (emphasis added). This may but need not be the case: Two well-off altruists can exchange some given income rather than transfer income to the poor. Unless we admit that the act of receipt of income creates suffering which is highly unrealistic such reciprocal transfers imply that the altruists end up with exactly the same income plus the satisfaction derived from having engaged in an enjoyable act. This Pareto-dominates transfers to the poor. That people indeed derive joy from such exchanges can be readily observed. My inviting you to lunch this week, your inviting me to lunch next week is more enjoyable than both of us sharing the bill at each of the two lunches. Or, my sending you a bouquet for your birthday, your sending me one for mine is more gratifying than each of us buying flowers for his own birthday.2