Altruists and the knowledge problem

I have posted before about Gary Becker’s argument that the evolution of altruism can be explained by a version of his rotten kid theorem. In short, if an altruist cares about other people’s welfare in addition to their own and is willing to transfer their resources to others, an egoist’s action to harm the altruist may also harm the egoist as the amount that the altruist would be willing to transfer to the egoist will be reduced. As a result, the egoist will refrain from hurting the altruist, making the altruist better off than if they were an egoist.

As I raised in my post, Becker’s argument can run into corner solutions, whereby the scale of the gain to the egoist and damage to the altruist are such that the egoist is willing to harm the altruist. However, I only recently realised that the year after publication of Becker’s article, the Journal of Economic Literature published responses to Becker’s paper by Jack Hirshleifer and Gordon Tullock, along with a reply by Becker.

Hirshleifer’s critique focuses on the order in which the altruist and egoist’s actions occur. If the egoist has the last word, they will likely take advantage of the altruist at the end, meaning that the altruist should not be as altruistic to begin with. In the case of altruism between a parent and child, the child will normally have the last word due to differences in ages. Tools such as a legal system that allows the making of wills are required for the altruist to have the last word.

Hirshleifer then goes on to show that Becker’s analysis is powerful where the altruist can keep the last word, and an altruist may be selfishly better off than if they were planning an egoistic action. Their altruism restrains the behaviour of the egoist.

In reply, Becker called Hirshleifer’s comments perceptive, with the note that his scenario can only work among a small number of relatives or neighbours (so Becker had already dealt with part of my criticism).

After quibbling with the definition of altruism, Tullock’s criticism focuses on an altruist’s ability to know the preference ordering of the recipient of the altruism. Tullock suggests judgments of this type are almost impossible. The history of charitable administration and its attempts to prevent recipients from taking advantage of gifts suggests a knowledge problem.

Tullock argues that in this case, the egoist can abuse the situation. For example, they could stop working, which reduces their income considerably but their utility only slightly as they no longer have to work. If the altruist only looks at the slacker’s loss of income, the altruist may effectively overcompensate the egoist.

Tullock also talks of the potential for corner solutions based on different orderings of the size of the gain of the egoist, damage to the altruist and transfer from the altruist. He notes that Becker’s scenario can only occur where the damage inflicted on the donor is greater in size than the gift that would be given to the egoist in the absence of damage, which is greater than the gain to the egoist from damaging the altruist. This is only one of six possible orderings (although two of the others involving no or almost no harm to the altruist are the most common).

Becker’s reply to Tullock is sharp. “Although Tullock’s comment is much longer than Hirshleifer’s, it is less focused and less useful, and my response shall be brief.” His dismissal of Tullock’s argument is largely on the basis that Becker is not seeking to explain altruism to people 1,000 miles away, but rather to kin and close neighbours about whom the altruist will have more knowledge. Further, while this is a restrictive class, Becker (rightfully) considers it an important one.

Becker’s point on knowledge of kin and neighbours does not completely nullify Tullock’s, as parents have imperfect knowledge of their children. That same criticism could be applied to kin selection, which requires some degree of understanding of what actions will benefit kin. However, Tullock may be comfortable that the criticism would also apply to kin selection given that he prefers group selection based explanations of altruism and cooperation.

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