philanthropy

A Price Theory of Altruistic Identity

Why do people behave altruistically? Economists’ traditional explanations have focused on direct care for others, a “warm glow” from the act of giving itself, and a desire for fairness. An emerging view, however, is that people simply wish to maintain an altruistic identity.

The key simplifying assumption is that individuals care about how generous they are conditional on being solicited, so that the number of times a person is solicited is the price of expressing a given level of altruistic identity.

Abstracting from higher order cognitive processes and other complicating features, individuals are assumed to care about how generous they would be conditional on being asked. The model shows that, under this assumption about altruistic preferences, total net donations and donor welfare decrease with the number of solicitors. These results represent an important first step in exploring market-level questions in markets driven by altruistic identity.

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