Gandhi Institute of Technology and Management    Higher School of Economics 

 Essay № 1 

 on Economics course 

 Topic 7 

 “ Why are people sometimes altruistic ? ” 

 Stefano Lovato 

 MDI-191 student 

 Sathyabama 

 April , 2020 

 In many classical economic theories , it is common to determine a human , as a very egoistic   creature . Adam Smith ’s books ( but not all of them ) were wrote based on this idea also .   However , the conception of Homo economicus was introduced for the first time by John Stuart   Mill in the nineteens century and it assumes , that all human beings are consistently rational ,   narrowly self - interested , and who pursue their subjectively - defined ends optimally1 . However ,   in our real life we face acts of altruism very often : our parents provide us with all necessary   goods , a lot of businessmen give money for charity and even strangers give money to homeless   people . So , it is very clear , that people do not necessarily acts in their own interests all the time ,   they also tend to help others . But what makes them to do this ? Why are people sometimes   altruistic ? 

 Gerashchenko Igor in his article “ The ethical teaching of A. Smith in the context of the modern   economy ” writes , that altruism has been existing from the very times of primitive man , as a   single egoistic individual was not capable to survive out of his or her community . All resources   were so difficult to get , that the efforts of the whole pride were essential in struggle for   survival . The following way the system of social values , where helping other people is highly   appreciated , started to form . The ideology of individualism instead of collectivism has appeared   much time later , when the market economy gave us a possibility to live independently from   each other , or to form smaller communities , as nuclear families . But even now , in modern word   and in modern families , we can see people continue to act in altruistic way . So , let ’s try to   discover , what other motives , besides ancient habit , do they have . 

 One of the mechanisms , which makes people act in altruistic way , is called reciprocal ( or   mutual ) altruism . It means , that individuals tend to help someone , who is likely to give   something back . But it does n’t mean , that human beings are egoistic . People subconsciously   wait for the same attitude to them after performing altruistic actions ( there the golden rule of   morality2 is taken place ) . Alexander Shmakov , the author of the article “ The purpose for just   cooperation as a motive of economic behavior ” , provides us with results of the experiment ,   which shows the relevancy of the statement , which was made above : 

 Both of two players ( A and B ) were provided with a certain amount of money ( a and b   respectively ) . Firstly , player A is asked to give a part of his money to player B , and after that   player B is also asked to give money to A. Both players are free to choose any amount of money   ( x or y respectively ) they want to give or not to give anything at all . 

 The rational strategy for both players will be not give money . Because in case , when A decided   to share , it would not be profitable for B to share money ( b + xa — yb < b + xa ) . And if A decided   not to give money , B would not give money either . However , in reality , when the experiment   took place , the results showed that 20 of 30 pairs of students shared their money . The average   received sum of money were 32,5 % of the initial one . But in case , when one of the players 

 1 The definition is taken from https://en.wikipedia.org/wiki/Homo_economicus .   2 Treat people the way you want to be treated . 

 Player A / Player B   To give money   Not to give 

 To give money   a + yb — xa , b + xa — yb   a — xa , b + xa 

 Not to give   a + yb , b — yb   a , b 

 denied the opportunity of cooperation ones , in most of the cases it put the end for the future   transaction , as the condition of relicense was lost . 

 One more thing , which can help us to understand the phenomenon of altruism , is economic   games . There exist a lot of such games , but the most famous are “ Dictator ” , “ Ultimatum ” and   “ The division of the public good ” .   In “ Dictator ” game one the players receives a sum of money ,   part of which he / she can give to another player . The rational behavior , which is expected from   the first person , is not to give anything , as only in this case he / she will get the maximum   possible profit . Strangely , but in 616 experiments3 , which were carried out , an average given   sum was about 28,35 % of the initial sum and only about 1/3 of all participants gave nothing . The   motive for such altruistic action is probably a sense of justice , as the first person did nothing in   order to get money , so he / she thinks , that it would be fair to share them . 

 Another explanation of altruism is people ’s consciousness about their reputation . As I   mentioned above , altruism is socially approved behavior , so individuals , who are known for   helping people around , may be in more respect , than others . So , the motives for the altruistic   actions can be not only empathy , but also concern for the opinion of others .   Charity donations   are a good example of an altruistic action , which has a considerable impact in person ’s   reputation . In most of the charity cases only small donations are made anonymously , but   names of people , who donate huge amounts of money , are usually well - known and numerous   times mentioned in newspapers , magazines and TV programs . So , philanthropists may expect   more support from the society , if they need , as they are known as a good person . 

 Developing the idea about philanthropy , we face another reason for being altruistic . This   motive is about being conscious of the future of the civilization , also known as communal   interest , which differ people from animals . People want to live in comfortable conditions ,   where hospitals , education and other social institutions work well enough . So , they are ready to   contribute to the common good in order to provide their families and themselves with better   life . That is why the idea of social altruism appeared . Scientists faced the fact , that they are   unable to explain why people continue help others even , when they do not have any filiation at   all . This type of behavior started to take place , when human ’s intentions goes beyond family   and reputational altruism . Ernst Fehr and Urs Fischbacher in their article “ Nature of human   altruism ” call this phenomenon a strong reciprocity , which works under the possibility of   altruistic remuneration or altruistic punishment ( stigmatization ) . 

 Taking all things into consideration , we can conclude , that altruism has a significant economic   effect not only on one particular person or a small social group , but on the whole society . And   strange , as it may seem , altruistic behavior can be profitable for the altruist as well as for   someone , who receives help . Moreover , many social organizations , even economic ones , would   not work at all , if people behaved themselves only in egoistic way , as due to desire to get the   maximum possible profit people may break adopted regulations , what may ruin the whole   system . 

 3 Kazantseva T.V. Altruism : the phenomenon and operationalization ( https://cyberleninka.ru/article/n/stremlenie- k - spravedlivomu - sotrudnichestvu - kak - motiv - ekonomicheskogo - povedeniya ) 

 Sources : 

 1 . Gerashchenko I.G. A. Smith 's Ethical Teaching in the Context of the Modern Economy // 

 Credo new ( http://www.intelros.ru/readroom/credo_new/k3-2018/36398-eticheskoe- uchenie-asmita-v-kontekste-sovremennoy-ekonomiki.html ) . 

 2 . Shmakov A.V. PURPOSE FOR JUST COOPERATION AS MOTIVES OF ECONOMIC BEHAVIOR 

 // Terra Economicus . 2010 . ( https://cyberleninka.ru/article/n/14398333 ) . 

 3 . Kazantseva T.V. Altruism : the phenomenon and operationalization 

 ( https://cyberleninka.ru/article/n/stremlenie-k-spravedlivomu-sotrudnichestvu-kak- motiv - ekonomicheskogo - povedeniya ) . 

 4 . Andreoni J. Philanthropy // Handbook of Giving , Altruism , and Reciprocity . Vol . 2 / S. 

 Kolm , J. Ythier ( eds . ) . Amsterdam ; L. ; N. Y. : Elsevier , 2006 . P. 1201 - 1265 .   ( https://econweb.ucsd.edu/~jandreon/WorkingPapers/Philanthropy.pdf ) 

 5 . Fehr E. , Schmidt K. M. The economics of fairness , reciprocity and altruism – experimental 

 evidence and new theories // Handbook of the economics of giving , altruism and   reciprocity . 2006 . ( https://www.melessa.uni- muenchen.de/team/vorstandssprecher/schmidt/publikationen/papers/reciprocalt.pdf ) 


EMAIL: 
ID_NUM: 
NAME_STUDENT: Stefano Lovato
PHONE_NUM: 
STREET_ADDRESS: 
URL_PERSONAL: 
USERNAME: 

### Task: You are a PII (Personal Identity Information) Detection. Given a essays written by students, you have to identify ONLY the following:
NAME_STUDENT - The full or partial name of a student that is not necessarily the author of the essay. This excludes instructors, authors, and other person names.
EMAIL - A student’s email address.
USERNAME - A student's username on any platform.
ID_NUM - A number or sequence of characters that could be used to identify a student, such as a student ID or a social security number.
PHONE_NUM - A phone number associated with a student.
URL_PERSONAL - A URL that might be used to identify a student.
STREET_ADDRESS - A full or partial street address that is associated with the student, such as their home address.
### Input: Gandhi Institute of Technology and Management    Higher School of Economics 

 Essay № 1 

 on Economics course 

 Topic 7 

 “ Why are people sometimes altruistic ? ” 

 Stefano Lovato 

 MDI-191 student 

 Sathyabama 

 April , 2020 

 In many classical economic theories , it is common to determine a human , as a very egoistic   creature . Adam Smith ’s books ( but not all of them ) were wrote based on this idea also .   However , the conception of Homo economicus was introduced for the first time by John Stuart   Mill in the nineteens century and it assumes , that all human beings are consistently rational ,   narrowly self - interested , and who pursue their subjectively - defined ends optimally1 . However ,   in our real life we face acts of altruism very often : our parents provide us with all necessary   goods , a lot of businessmen give money for charity and even strangers give money to homeless   people . So , it is very clear , that people do not necessarily acts in their own interests all the time ,   they also tend to help others . But what makes them to do this ? Why are people sometimes   altruistic ? 

 Gerashchenko Igor in his article “ The ethical teaching of A. Smith in the context of the modern   economy ” writes , that altruism has been existing from the very times of primitive man , as a   single egoistic individual was not capable to survive out of his or her community . All resources   were so difficult to get , that the efforts of the whole pride were essential in struggle for   survival . The following way the system of social values , where helping other people is highly   appreciated , started to form . The ideology of individualism instead of collectivism has appeared   much time later , when the market economy gave us a possibility to live independently from   each other , or to form smaller communities , as nuclear families . But even now , in modern word   and in modern families , we can see people continue to act in altruistic way . So , let ’s try to   discover , what other motives , besides ancient habit , do they have . 

 One of the mechanisms , which makes people act in altruistic way , is called reciprocal ( or   mutual ) altruism . It means , that individuals tend to help someone , who is likely to give   something back . But it does n’t mean , that human beings are egoistic . People subconsciously   wait for the same attitude to them after performing altruistic actions ( there the golden rule of   morality2 is taken place ) . Alexander Shmakov , the author of the article “ The purpose for just   cooperation as a motive of economic behavior ” , provides us with results of the experiment ,   which shows the relevancy of the statement , which was made above : 

 Both of two players ( A and B ) were provided with a certain amount of money ( a and b   respectively ) . Firstly , player A is asked to give a part of his money to player B , and after that   player B is also asked to give money to A. Both players are free to choose any amount of money   ( x or y respectively ) they want to give or not to give anything at all . 

 The rational strategy for both players will be not give money . Because in case , when A decided   to share , it would not be profitable for B to share money ( b + xa — yb < b + xa ) . And if A decided   not to give money , B would not give money either . However , in reality , when the experiment   took place , the results showed that 20 of 30 pairs of students shared their money . The average   received sum of money were 32,5 % of the initial one . But in case , when one of the players 

 1 The definition is taken from https://en.wikipedia.org/wiki/Homo_economicus .   2 Treat people the way you want to be treated . 

 Player A / Player B   To give money   Not to give 

 To give money   a + yb — xa , b + xa — yb   a — xa , b + xa 

 Not to give   a + yb , b — yb   a , b 

 denied the opportunity of cooperation ones , in most of the cases it put the end for the future   transaction , as the condition of relicense was lost . 

 One more thing , which can help us to understand the phenomenon of altruism , is economic   games . There exist a lot of such games , but the most famous are “ Dictator ” , “ Ultimatum ” and   “ The division of the public good ” .   In “ Dictator ” game one the players receives a sum of money ,   part of which he / she can give to another player . The rational behavior , which is expected from   the first person , is not to give anything , as only in this case he / she will get the maximum   possible profit . Strangely , but in 616 experiments3 , which were carried out , an average given   sum was about 28,35 % of the initial sum and only about 1/3 of all participants gave nothing . The   motive for such altruistic action is probably a sense of justice , as the first person did nothing in   order to get money , so he / she thinks , that it would be fair to share them . 

 Another explanation of altruism is people ’s consciousness about their reputation . As I   mentioned above , altruism is socially approved behavior , so individuals , who are known for   helping people around , may be in more respect , than others . So , the motives for the altruistic   actions can be not only empathy , but also concern for the opinion of others .   Charity donations   are a good example of an altruistic action , which has a considerable impact in person ’s   reputation . In most of the charity cases only small donations are made anonymously , but   names of people , who donate huge amounts of money , are usually well - known and numerous   times mentioned in newspapers , magazines and TV programs . So , philanthropists may expect   more support from the society , if they need , as they are known as a good person . 

 Developing the idea about philanthropy , we face another reason for being altruistic . This   motive is about being conscious of the future of the civilization , also known as communal   interest , which differ people from animals . People want to live in comfortable conditions ,   where hospitals , education and other social institutions work well enough . So , they are ready to   contribute to the common good in order to provide their families and themselves with better   life . That is why the idea of social altruism appeared . Scientists faced the fact , that they are   unable to explain why people continue help others even , when they do not have any filiation at   all . This type of behavior started to take place , when human ’s intentions goes beyond family   and reputational altruism . Ernst Fehr and Urs Fischbacher in their article “ Nature of human   altruism ” call this phenomenon a strong reciprocity , which works under the possibility of   altruistic remuneration or altruistic punishment ( stigmatization ) . 

 Taking all things into consideration , we can conclude , that altruism has a significant economic   effect not only on one particular person or a small social group , but on the whole society . And   strange , as it may seem , altruistic behavior can be profitable for the altruist as well as for   someone , who receives help . Moreover , many social organizations , even economic ones , would   not work at all , if people behaved themselves only in egoistic way , as due to desire to get the   maximum possible profit people may break adopted regulations , what may ruin the whole   system . 

 3 Kazantseva T.V. Altruism : the phenomenon and operationalization ( https://cyberleninka.ru/article/n/stremlenie- k - spravedlivomu - sotrudnichestvu - kak - motiv - ekonomicheskogo - povedeniya ) 

 Sources : 

 1 . Gerashchenko I.G. A. Smith 's Ethical Teaching in the Context of the Modern Economy // 

 Credo new ( http://www.intelros.ru/readroom/credo_new/k3-2018/36398-eticheskoe- uchenie-asmita-v-kontekste-sovremennoy-ekonomiki.html ) . 

 2 . Shmakov A.V. PURPOSE FOR JUST COOPERATION AS MOTIVES OF ECONOMIC BEHAVIOR 

 // Terra Economicus . 2010 . ( https://cyberleninka.ru/article/n/14398333 ) . 

 3 . Kazantseva T.V. Altruism : the phenomenon and operationalization 

 ( https://cyberleninka.ru/article/n/stremlenie-k-spravedlivomu-sotrudnichestvu-kak- motiv - ekonomicheskogo - povedeniya ) . 

 4 . Andreoni J. Philanthropy // Handbook of Giving , Altruism , and Reciprocity . Vol . 2 / S. 

 Kolm , J. Ythier ( eds . ) . Amsterdam ; L. ; N. Y. : Elsevier , 2006 . P. 1201 - 1265 .   ( https://econweb.ucsd.edu/~jandreon/WorkingPapers/Philanthropy.pdf ) 

 5 . Fehr E. , Schmidt K. M. The economics of fairness , reciprocity and altruism – experimental 

 evidence and new theories // Handbook of the economics of giving , altruism and   reciprocity . 2006 . ( https://www.melessa.uni- muenchen.de/team/vorstandssprecher/schmidt/publikationen/papers/reciprocalt.pdf )
### Output: 