Generous people cross the street before the beggar

Robert Wiblin points to a study showing that the most generous people are the most keen to avoid situations where they will be generous, even though the people they would have helped will go without.

We conduct an experiment to demonstrate the importance of sorting in the context of social preferences. When individuals are constrained to play a dictator game, 74% of the subjects share. But when subjects are allowed to avoid the situation altogether, less than one third share. This reversal of proportions illustrates that the influence of sorting limits the generalizability of experimental findings that do not allow sorting. Moreover, institutions designed to entice pro-social behavior may induce adverse selection. We find that increased payoffs prevent foremost those subjects from opting out who share the least initially. Thus the impact of social preferences remains much lower than in a mandatory dictator game, even if sharing is subsidized by higher payoffs…

A big example of generosity inducing institutions causing adverse selection is market transactions with poor people.

For some reason we hold those who trade with another party responsible for that party’s welfare. We blame a company for not providing its workers with more, but don’t blame other companies for lack of charity to the same workers. This means that you can avoid responsibility to be generous by not trading with poor people.

Many consumers feel that if they are going to trade with poor people they should buy fair trade or thoroughly research the supplier’s niceness. However they don’t have the money or time for those, so instead just avoid buying from poor people. Only the less ethical remain to contribute to the purses of the poor.

Probably the kindest girl in my high school said to me once that she didn’t want a job where she would get rich because there are so many poor people in the world. I said that she should be rich and give the money to the poor people then. Nobody was wowed by this idea. I suspect something similar happens often with people making business and employment decisions. Those who have qualms about a line of business such as trade with poor people tend not to go into that, but opt for something guilt free already, while the less concerned do the jobs where compassion might help.

11 responses to “Generous people cross the street before the beggar

  1. There is the simpler explanation that we gain or lose status via the status of the people with which we affiliate. So when we trade with lower status people, we lose status, compared with trading with higher status people. I expect this effect to be much stronger than trying to avoid charity responsibility.

  2. One such case:

    Australians condemn people smugglers who put asylum seekers into leaky boats to get to Australia. Of course this is the best option for the asylum seekers, so all you can say it the people smugglers aren’t doing a good enough job of helping them for free. Yet, we in Australia are equally able to help asylum seekers get to Australia safely by donating them boats or money, but nobody does. It’s just because the people smugglers are trading with them that they end up with some extra responsibility to help them, as you describe.

  3. I’m enjoying your very thoughtful writing. Please continue!!

    If I may add something, there is an argument for becoming rich that is *also* driven by guilt about the poor. Many who are driven to become rich say that part of their motivation is to give to the poor, but this often belies a hidden guilt about one’s initial privilege due to accident of birth in a developed nation.

    This is part of the critique of “social entrepreneurship,” especially the notion that one can help the world and make a killing doing so. The profit that is made in such an endeavor is created in the context of global inequality, and often further entrenches systems of injustice, even as the social entrepreneur and philanthropist can feel great about being so generous with his accumulated wealth.

  4. Duff: even if the current system is a bad one compared to alternatives, one should only reject it outright and refuse to do good within it if doing so will actually help bring about one of the more desirable alternatives. That seems very unlikely.

  5. Pingback: Don’t help refugees, you bastards « Robert Wiblin

  6. Interesting points. Makes me wonder about autonomy, interdependence, and what having more information might do to influence choices.

  7. For some reason we hold those who trade with another party responsible for that party’s welfare
    That reminds me of an argument I got in regarding price-gouging during disasters. I argued that the only consistent positions are that everyone is obligated to be self-sacrificing & altruistic, so that those who do nothing share the same guilt as gougers, or that gouging is blameless.

  8. The first idea that came to ming when reading the post is that Generosity is just a signal and as with all the other signals, you always try to optimize the cost to gains ratio. Helping really poor people costs you a lot but wins you very little in terms of reputation compared to the case of not helping them and instead donating the money to save puppies.

    If you have a reputation for being generous, then, of course you need to keep it up in all the situations that you happend into (because one case of selfish behavior is usually enough to rob you of that image). This means that it is common sense for you to avoid all sorts of situations where sending the “generous” signal is just too costly.

    This usually works because people do not think 3 steps ahead (in terms of consequences of other peoples behaviors) in the intuitive level and so avoiding a situation changes others perception of you considerably less than going in the situation and just not doing enough to help.

    Think of the case of avoiding a beggar on the street. If you think of yourself as a generous person, you know that if he asks you for money you should give him some or change your perception of self. However, if you can avoid him asking, youre home free in terms of not losing any money or reputation.

  9. Also, something really cynical but right on the nail on that topic: “The Guilt Song” by Tim Minchin

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  11. Hey there everyone i was just introduceing myself here im a first time visitor who hopes to become a daily reader!


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