Log in / Register
Home arrow Economics arrow Generalized Microeconomics
< Prev   CONTENTS   Next >



Standard microeconomics deals with selfish individuals who are interested solely in their own welfare. However, interest in the welfare of others also figures in the economic behaviour of most individuals. Every individual is — to some extent — willing to give up his own benefit (e.g. money) for the benefit of his fellow man. This is an expression of belonging to the community,[1] where the individual is [or feels to be] a member of this community, for example belonging to family, firm, town or country or just the community of decent people.

Altruism and belonging to the community are a natural part of human ethics. The classical economist Adam Smith was astonished by the human emphasis on the ethical aspect of human behaviour, which, even on the economic level, is not determined solely by personal prosperity.[2]

Altruistic behaviour can be explained in evolutionaiy terms:[3] a higher degree of solidarity among the members of a community, as evidenced, for example, by a greater degree of redistribution, usually[4] ceteris paribus increases that community's odds of survival in the struggle for survival against other groups.

Altruism, and even "hard-core” altruism[5], can therefore be understood in terms of our generalized economics if we treat it as a special case of belonging to the community.[6] If an individual feels mutuality with other individuals and regards them as part of himself ("me”), the provision of financial support at the expense of purely personal gain is a decision that can be explained by maximization of his personal probability of survival. A community member displays aversion not only to situations with a high economic threat to his own person, but also to situations with a high economic threat to other community members.

Altruism and belonging to the community are not a consequence of exclusively rational thinking, of course. Yet even here, there are economically rational and irrational decisions, for instance when a donor distributes a subsidy among multiple recipients.

Altruism may lie outside the mainstream of standard microeconomics, but it is by no means a neglected issue. Many economists — from the a for ementioned Adam Smith through to Nobel prize winners Herbert Simon and Gary Becker — have described and analysed the causes of altruistic behaviour.[7]

  • [1] This issued is studied in Hlaváček, J. et al.: Mikroekonomie sounáležitosti se společenstvím. Praha: Karolinum, 1999.
  • [2] “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” See Smith, A.: The Theory of Moral Sentiments. New Rochelle, NY: Arlington House, 1969 (first published in 1759). In his theory of altruism, Adam Smith described a relationship of strong practical incentives and weak ethical incentives (principles) as the mechanism of suppression of self-interest.
  • [3] See Axelrod, G.: The Evolution of Cooperation. New York: Basic Books, 1981.
  • [4] Not necessarily. In certain cases an altruist can threaten a community by irrational self-sacrifice. For in-stance, an extreme sacrifice by one member of a family can jeopardize his personal survival and thereby destroy the family. For more details, see Hlaváček, J. et al.: Mikroekonomie sounáležitosti se společenstvím. Praha: Karolinum, 1999, pp. 151–55.
  • [5] Altruism motivated by expected compensation is referred to as “soft-core” altruism. If a donor expects no compensation, we speak of “hard-core” altruism. The distinction between hard-core and soft-core al-truism was introduced by the founder of sociobiology E. O. Wilson. See Wilson, E. O.: On Human Nature. Cambridge: Harvard University Press, 1978.
  • [6] See Etzioni, A.: The Moral Dimension. Toward a New Economics. New York: The Free Press, 1988. The way Etzioni sees it, “I” contains “we”, which is a part of every individual. According to Etzioni, the social and moral dimension of human preferences enhances the stability and usually also the quality of economic decision-making.
  • [7] See, for example, Simon, H. A.: A Mechanism for Social Selection and Successful Altruism. Science 250, 4488(1990): 1665–68, and also Becker, G. S.: The Theory of Social Interactions. Journal of Political Economy 82, 6(1974): 1063–93 or Becker, G. S.: Altruism, Egoism and Genetic Fitness: Economics and Sociobiology. Journal of Economic Literature 14, 3(1976): 817–26. In Czech, see, for example, Klusoň, V.: Instituce a odpovědnost: K filosofii ekonomické vědy. Praha: Karolinum, 2004, or Mlčoch, L.: Ekonomie důvěry a společného dobra. Praha: Karolinum, 2006.
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
Business & Finance
Computer Science
Language & Literature
Political science