1. Altruistic Economics A presentation by Robin Upton, 2010-08-11, Latest version at www.altruists.org/ae605 www.altruists.org/ae605 Attribution – NonCommercial - ShareAlike www.altruists.org AE6 05 : What Economics Can't Tell You About Money V1.1

2. Contents 3.Money Sharing Games 5.Selfishness of Economists 4.Subliminal Effect 1.Money as Motivation 2.Relationship to Pain

3. 1.Money as Motivation In 1973, a US blood bank randomly asked former donors one of 2 different questions: A) “Would you like to donate blood again?” B) “Would you like to donate blood again, if we give you a $10 reward?” 93% 65% http://www.altruists.org/d998

4. Woldenschiessen, Switzerland In 1990's, adult residents of Wolfenschiessen, Switzerland, were asked about a local nuclear waste processing facility: A) “Would you support its construction?” B) “Would you support its construction, if given a reward of up to $8700?” 51% 25% http://www.altruists.org/d998 C + C

5. Money “Crowds Out” Other Motives Money motivation reduces altruism. Why did money work as a disincentive?......when money is involved, people think more selfishly.

6. 2. Relationship to Pain People put their hand in hot water then rated the pain, after 2 different counting activities... http://www.altruists.org/f1000 Counting money decreased pain sensitivity......especially when people are already feeling social exclusion!

7. Losing Money heightens Pain People put their hand in hot water then rated the pain, after chatting about 2 different topics... http://www.altruists.org/f1000 Talk of money loss heightened pain sensitivity......especially when people are already feeling social exclusion!

8. Money as a (Social) Pain Killer Money reduces people's natural desire for friendship. Why did touching money reduce people's pain? Thinking about money makes most people feel strong & independent. “The mere idea of money has considerable psychological power, enough to alter reactions to social exclusion and even to physical pain.”

9. Player A receives money to split between himself & Player B Both players than receive this allocation. http://www.altruists.org/d998 Player BPlayer APlayer BPlayer A Economic Theory predicts Player A will not give any money away In reality, Player A often splits the money evenly 3.The Dictator Game

10. The Ultimatum Game Like the Dictator Game, Player A splits the money, but then Player B can choose to accept this or cancel the experiment. http://www.altruists.org/ideas/economics/behavioral Player BPlayer APlayer BPlayer A Theory predicts Player B will accept any split: In reality, Player B often rejects unequal splits:

11. Why Don't People Self-maximise? Most people like things to be fair, a reality to which economics is blind. Dictator Game: Why do dictators give away any money? Ultimatum Game: Why does Player B reject unfair splits?

12. “Pull up a chair...” 4.Subliminal Effect The experimenter invited people to pull up a chair... http://www.altruists.org/f1000 A computer in the background showed one of 3 different screensavers. And proximity to the desk was measured.

13. Distancing Effect The money screensaver increased the distance people sat from the experimenter! http://www.altruists.org/f1000

14. People were then asked for help by someone they thought was another volunteer http://www.altruists.org/f1000 The money screensaver dramatically decreased willingness to help! Effect on Helpfulness

15. Subliminal Effect Money encourages competition rather than collaboration. Why did the money screensaver make people less helpful and sit further away? Even subtle reminders of money make people feel more independent. “In summary,we found that small reminders of money produced large changes in behavior.” http://www.altruists.org/f1000

16. 5.Selfishness of Economists Since 1990's, many studies have compared behavior of economics graduates with other graduates. (Why) do selfish people self-select in economics? EconomistsNon-economists They give less to charity......and are more selfish in experiments. A B A B

17. Does Economics attract Selfish Students? This answer is still unclear. (Why) do selfish people self-select in economics? Or does Studying Economics increase Selfishness? Or Both?