"When Self-Interest Isn’t Everything"

Why do people donate to political campaigns?:

When Self-Interest Isn’t Everything, by Robert H. Frank, Commentary, NY Times: Traditional economic models assume that people are self-interested in the narrow sense. If “homo economicus” — the stereotypical rational actor in these models — finds a wallet on the sidewalk, he keeps the cash inside. He doesn’t leave tips after dining in restaurants that he will never visit again. And he would never vote in a presidential election, much less make an anonymous donation of money or time to a presidential campaign.

This posture stems from the so-called free-rider problem, a cornerstone of rational-choice theory. The problem ... is that even those who share a presidential candidate’s policy goals will reap no significant material advantage by donating their time or money. After all, with cash donations legally capped at $2,300, even donors who give the maximum have no realistic hope of influencing an election’s outcome. Nor can any individual volunteer ... realistically hope to tip an election.

Although the logic of the free-rider problem may seem compelling, people’s behavior strikingly contradicts many of its predictions. Last month alone, for example, the presidential campaign of Senator Barack Obama raised over $32 million from more than 250,000 individual donors and sent huge numbers of volunteers into the field. (Disclosure: I’m an Obama contributor myself.) Other campaigns have benefited in similar, if less spectacular, ways from their supporters’ willingness to set narrow self-interest to one side.

Die-hard proponents of self-interest models sometimes counter that by becoming involved in campaigns, volunteers reap a variety of personal advantages. They often meet interesting people, ... or they may learn about attractive employment opportunities. Major donors, for their part, are often rewarded with ambassadorships or other prominent positions when their candidate wins.

Fair points, especially when applied to “bundlers” — those donors who assemble contributions totaling hundreds of thousands of dollars from friends and associates. But what about the millions of others who make small cash donations? The elderly South Carolina woman who sent her chosen candidate a money order for $3.01 surely did not expect to be appointed ambassador to the Court of St. James next January. And what about the volunteers who staff phone banks from home, or who perform other tasks that offer little opportunity for social interaction?

When viewed through the lens of traditional self-interest models, such behavior is equivalent to the impossible geological phenomenon of rivers flowing uphill. It often seems to entail a yearning to participate in something larger than oneself and is by no means limited to the political domain. Fans of sports teams, for example, often seem oblivious to the standard cost-benefit calculations, as do the followers of certain rock bands. ...

Many people have likened the response to Mr. Obama’s appeal for civic engagement to the response to similar appeals by President John F. Kennedy during the 1960s. Then, as now, many economists were skeptical. The Nobel laureate Milton Friedman, for example, began the opening chapter of his 1962 book, “Capitalism and Freedom,” by quoting the already-famous passage from Kennedy’s inaugural address in which he said, “Ask not what your country can do for you, ask what you can do for your country.” Mr. Friedman seemed to find the statement unintelligible, or at any rate not “worthy of the ideals of free men in a free society.”

“The free man,” he wrote, “will ask neither what his country can do for him, nor what he can do for his country.”

Some economists seem similarly baffled by the exuberance inspired by the Obama candidacy. But while homo economicus may be unresponsive to calls for sacrifice for the common good, the plain fact is that many people find such calls compelling.

Self-interest is surely an important human motive, perhaps even the most important motive much of the time. But it is never the only important motive. And during at least some moments in history, narrow self-interest models miss the essential story line completely. This may be one of those moments.
[Note: the original article also offers an explanation for the behavior based on the work of Albert Hirschman.]

Comments

[Robinia]

Yep. And since so many of Robert Frank's neighbors and Cornell colleagues here in Tompkins County, NY, understand this... we were the one county in NYS in which Obama won the Democratic Primary. Engaging people in contributing to solutions may be our best shot at mopping up the Bush mess, containing the damage from the coming recession, and dealing effectively with the challenges of global climate change.

[Andrew]

Anyone who wishes to oversimplify human behavior as entirely self-interested can contrive any action as being self-interested. One of academia's worst problems is, in my opinion, the constant insistence that because one can show theory 'A' is a causal factor, every other theory must be wrong. As though anything humans do can be explained by a single factor.

With respect to RF's evident Obamamania, I'd like to take this moment to point out that Obama is one of the only Dems to vote for Darth Cheney's corporate giveaway which came out of the 2005 secret 'Energy Task Force'. Obama further changed the wording from 'mandatory' to 'voluntary' when nuclear plants have to disclose the release of toxic gases. He made this change shortly after receiving significant campaign donations from Exelon, an Illinois nuclear company.
Given the deluge of nightmares these last several years, we can clearly do a lot worse than Obama. We do need to evaluate his actual positions and voting records a bit more thoroughly before falling for the soaring rhetoric, however.

[James Killus]

Anyone who wishes to oversimplify human behavior as entirely self-interested can contrive any action as being self-interested.
The question on such contrivances is whether or not they carry any predictive power, or are merely ex post facto rationalizations/explanations.

Andrew is missing the more important point about what is considered "self-interest" in economics. In economics generally, "self-interest" is considered to be entirely economic, usually monetary. When it is observed that money is not the entirety of existence, then a "utility function" comes into play, but this tosses the matter back onto those "contrivances."

When someone like Frank says something as bizarre as
Fans of sports teams, for example, often seem oblivious to the standard cost-benefit calculations, as do the followers of certain rock bandsit's fairly certain that the train has left the rails. The fans of sports teams and rock bands are fans because they enjoy it. I have no idea why I have to keep explaining this to people.

[Jay]

People donate to political campaigns for the same reason they donate to churches. Some people worship God. Some people worship Yahwek. While others worship Hillary and still some worship Barack, John, Mike, or Ron.

[Andrew]

James,
I believe you are missing the point.
I (and I believe I can safely speak for Frank on this matter) understand utility function and what is meant by self-interest in economics perfectly well. It requires a remarkable level of arrogance to presume anyone does not understand that people sometimes do things because they enjoy them.

This article attempts to disabuse folks of the notion that economic self interest is the primary motivator for human beings. The meme is pervasive and needs to be addressed. Perhaps you disagree as to the seriousness of such misconceptions, but painting those who address them with a strawman of ignorance contributes nothing substantiative to the conversation.

[Robert Edele]

For normal people (ie., those not expecting favors in return), making campaign contributions probably comes out of the same mindset as giving to charity. Perhaps they feel that it gives a much better return than donating to charities and thus is a more efficient use of their time or money.

I personally feel that campaign contributions are a waste in this particular country at this particular time (since the only two parties with a realistic chance of winning support the ruling class's interests and not mine, and no amount of contributions will change that), but there's no denying that a small amount of political money controls a heck of a lot of government money.

[Craig Nelson]

It's stupefyingly silly to think "homo economicus" models will explain homo sapiens behavior since "homo economicus" does not even explain economic choices. We are a social species so self-interest is not sufficient either. We join groups to obtain collective power -- even logical positivists do so-- and because we are wired to join. Robert Frank deserves to be in Richard Posner's next list of public intellectuals with his peers like Friedman

[robertdfeinman]

This is just another variation on the never-ending discussion on whether their is such a thing as "altruism". What we will see over next nine months is that each such discussion gets combined with the side issue of justifying one's choice of candidate using the argument at hand. Discussions of basic principles will become candidate bashing instead. This is unfortunate.

Personally when I donate to a political cause I do so because I expect a positive benefit, even though it may be slight and indirect. For example I think electing a candidate who is not so cavalier about ignoring rules of evidence and free speech will be of benefit to me, even though I don't expect my online ramblings to be of interest to the security agencies.

There is too much history that shows what happens when the free flow of information gets restricted by political power groups and much of it has implications in areas like career advancement and economic activity. One only has to look at the USSR or present day China to see what happens when you don't toe the party line. I don't want my children to live in a society that may take on characteristics like these, so I give to candidates who seem less likely to support this trend.

Is this "self interest" or altruism?

[Non-economist]

"Personally when I donate to a political cause I do so because I expect a positive benefit, even though it may be slight and indirect."

But the point of RAT is that your contribution doesn't make a difference. If a lot of other people contribute then the fact that you don't will not matter, and if they don't then your contribution won't help. The is the definition of the free rider problem; you get whatever benefit you get whether you contribute or not.

I myself contribute partly out of a sense of obligation, partly out of solidarity with those who lose by current policies (such as the American non-wealthy and almost all Iraqies) and partly to feel that I did what I could, however futile it might be. I take some comfort from the thought that if I feel this way than perhaps enough others do to make a difference (which seems actually to be happening).

It is indeed possible to construct a preference curve that will make my actions, and virtually any others, reward maximizing. This is why Karl Popper classed economics with psychoanalysis as a non-science (although I think he was wrong).

"I personally feel that campaign contributions are a waste in this particular country at this particular time (since the only two parties with a realistic chance of winning support the ruling class's interests and not mine, and no amount of contributions will change that) "

After seven years of Bush there's still someone who doesn't understand the difference between bad and worse. How depressing.

[Fred]

Self-interest can explain everything, provided you consider it broadly enough. It is in a child's self-interest to get along with his parents or else his parents might break his arm. Asymmetric information here, child doesn't know that breaking people's arm is against the law and the punishment is pretty severe. So the child develops a habit of trying to get along with other people and with society by extension, and this habit once formed is difficult to break, especially since it is constantly being reinforced for everyone who has to participate in society as a student or worker. As long as this habit of getting along with society exists, it is painful (disutilitous) to violate the norms of society, including norms which require us to participate in politics. Maximum utility for the well-socialized individual occurs when the individual behaves in a well-socialized manner.

[James Killus]

Frank:Fans of sports teams, for example, often seem oblivious to the standard cost-benefit calculations, as do the followers of certain rock bands.Andrew:
It requires a remarkable level of arrogance to presume anyone does not understand that people sometimes do things because they enjoy them.

Well, there we are. It looks to me like Mr. Frank is, in fact, either accusing "standard cost-benefit calculations" made by economists as not understanding that people sometimes do things because they enjoy them, or, Mr. Frank is saying that his cost benefit calculations give this result.

In the former case, then I was attributing good faith to what was apparently a straw man argument. If that is the case, my mistake. In the latter case, Mr. Frank is, in Andrew's estmation, displaying a "remarkable level of arrogance" but Andrew has decided to displace that judgement onto me, not Frank.

The idea that it is easy to make the case that "everyone does everything out of self-interest" breaks down when one tries to get a handle on what constitutes "self" and "interest." In fact, both of those concepts are devilishly difficult to analyze, and human behavior still remains a conundrum. A religious fanatic believes that they operate on a promise of joyous eternal life. Fine. Now get from there to warfare, torture, self-flagellation, speaking in tongues, snake-handling, empire buidling, or any of the other behaviors that have been "explained" as examples of religious zeal. Show your work.

[Syaloch]

James Killus:

It looks to me like Mr. Frank is, in fact, either accusing "standard cost-benefit calculations" made by economists as not understanding that people sometimes do things because they enjoy them, or, Mr. Frank is saying that his cost benefit calculations give this result.

Andrew's correct. Clearly, it was to former.

In the former case, then I was attributing good faith to what was apparently a straw man argument. If that is the case, my mistake.

Good, that's settled. Let's move on.

[btg]

homo economicus would never run into a burning building to save a small child...

nor would homo economicus ever voluntarily enlist or re-enlist in the military in a time of war, and homo economicus would dodge the draft... unless the financial rewards were so generous to overcome the risk of death or injury.

meaning that any country of homo economicus would soon be taken over by a country of mercenaries or of non-homo economicus.

and in a communist country, homo economicus would gladly spy on others or rat out his friends for even the slightest material reward.

even ayn rand style objectivism seems more reasonable, in that at least there is the possiblity of people doing things for selfish personal reasons that have little to do with material wealth.

[btg]

"The idea that it is easy to make the case that "everyone does everything out of self-interest" breaks down when one tries to get a handle on what constitutes "self" and "interest." "

people often do perverse things because there is some sense of reward or justice about it.

many young women in prison cut themselves - their arms in particular - and there is all sorts of other self-destructive behaviour that people engage in for reasons we cannot fathom yet must in some way have some motivation or create some form of gratification, even if it can only be explained by something such as self-loathing - "i am not worthy, therefore i must punish myself"

[Fred]

James Killus:

get from there to warfare, torture, self-flagellation, speaking in tongues, snake-handling, empire buidling, or any of the other behaviors that have been "explained" as examples of religious zeal. Show your work.

It's possible, but the work will involve depth psychology, which makes it more susceptible to error than even ordinary economics, which itself is unable to perform double-blind repeatable controlled experiments.

Ultimately, all phenomena CAN in theory be reduced to physics. In particular, all of the social sciences can be reduced to psychology and psychology can be reduced to physiology and physiology can be reduced to physics via chemistry. The last step (physiology to physics) is already more or less possible and the first step (economics/sociology/anthropology/politics to psychology) is ongoing. But the second step (psychology to physiology) is the hard part, even though this is the step that is easiest for the amateur to pursue. We all have a personal psychology to introspect and experiment with after all, and human physiology is sufficiently well understood to make the step possible. The problem is the huge number of degrees of freedom. The blunders of Freudianism are an example of what can go wrong with this step.