Introduction9-10corrige

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Introduction to the Economics of Altruism, Giving, and Reciprocity

Serge-Christophe KOLM

First think, then compute

(A teacher of mathematics)

Content

Foreword

I GENERA !"ER"IE#$% &he economics of moral sentiments'% (otives for altruism and altruistic giving)% *tructures of altruism+% Altruism and democracy Altruistic -oint giving and its pu.lic implementation

/% (otives and reasons for nonaltruistic giving0% &he structure of nonaltruistic giving6.1 From motives to forms6.2 Contradictions and possibilities in the logic of motives

1% &he inefficiency of individual giving when -oint or pu.lic giving is possi.le the perple2ing -oint givingtheorem3% Reciprocities

8.1 An overview8.2 !man roc"s on which societies are b!ilt#8.$ %he special games of reciprocit&

4% Importance and scope of giving, altruism, and pro5social conduct'.1 verview'.2 Families

'.$ %he political and p!blic sector '.$.1 !blic services and general political motives'.$.2 Actors of the political and p!blic s&stem

'.* +iving in philanthrop&, solidarit&, and charit&'.*.1 -ocial sit!ation'.*.2 otives

'./ +eneral respect, civilit&, socialit&, and help'.6 %he correction of fail!res# of e0changes and organi ations'. Associations, cl!bs, cooperatives'.8 %he wor"place and labo!r relations'.' -ocial giving3 relation, s&mbol, stat!s'.14 5ormative economics and the good societ&

$6% Giving reactions

14.1 Abo!t two partic!lar iss!es that ca!ght the fanc& of economists3 intertemporal giving and theinternali ation of the gift e0ternalit&14.1.1 ntertemporal giving, both wa&s3 be7!est and the retro gift p!blic debt14.1.2 9conomic internali ation of helping e0ternalities

14.2 nterferences with altr!istic giving3 general view$$% *olving 7Adam *mith8s pro.lem9$'% &he causes of and reasons for altruism

II A &R:I*(* AN; GI"ING$)% Altruisms types and causes or reasons

1$.1 +eneral presentation1$.1.1 ntrod!ction1$.1.2 %he twelve basic t&pes of altr!ism1$.1.$ %he ob:ects of reasons for giving and altr!isms

+ift or receiver;s sit!ation

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aternalism#1$.2 5at!ral or hedonistic altr!isms

1$.2.1 9motional contagion1$.2.2 9mpathies1$.2.$ Affection and s&mpath&1$.2.* Compassion and pit&

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16.8 @istrib!tion as a p!blic good3 the distrib!tive s!rpl!s$1% =istorical landmar?s

1 .1 9conomics and altr!ism1 .2 nterdependent !tilities and social choice1 .$ Altr!ism and !ncertaint&1 .* nterdependent !tilities and interdependent giving

1 ./ A notable debate3 blood and the efficienc& of giving1 .6 ol!mes in the economics of giving, altr!ism and reciprocit&

Appendi2 to *ection 1 &he -oint giving theoremReferences and @i.liography14.2 nterferences with altr!istic giving3 general view

%able $. otives for non altr!istic giving

Foreword

?ove, :!stice, and compassion move people, allocate goods, and str!ct!re societies. Families Bthe instit!tions for love B form and endow children, th!s creating most of acc!m!lation and

growth. 90change and mar"ets rest on the respect of rights and r!les, m!ch of which isspontaneo!s. Compassion alleviates miseries collectivel& thro!gh the s!pport of p!blic aid,and individ!all& thro!gh private and organi ed charit&. oting and political action areimportantl& motivated b& views of the common good, the p!blic interest, and fairness, andthe& determine the high level of ta0es paid. All organi ations re7!ire some m!t!al aid andtr!st among their members. ario!s associations are created with the main or sole p!rpose ofacting together or en:o&ing each other. ?ife in societ& and its 7!alit& re7!ire the respect ofothers and their rights, basic fairness, and readiness to help. %he 7!est for self interest is oftenin fact that of means to give to one;s famil&, sec!re the respect of others, and sometimes helpothers or s!pport ca!ses. itho!t the re7!ired concerns for others, self interested interactionswo!ld prod!ce miseries, fail to wor" thro!gh e0change, and degenerate into wars of all

against all. f &o! cannot ma"e good literat!re with good sentiments,# as AndrD +ide wrote,&o! can hardl& ma"e good economics with onl& poor ones. an is neither angel nor beast.#Altr!ism, giving or respecting, and reciprocities B i.e., answering a gift with another gift B areh!man roc"s on which societies are b!ilt.# ( . a!ss). 1 %his incl!des their econom&.

%his topic wo!ld have to become the new frontier of economics, were it not, in fact, itsoldest concern and tradition. 9conomics has alwa&s st!died altr!ism and giving, withlandmar"s in wor"s of Adam -mith, =ohn -t!art ill, Esidro 9dgeworth, ilfredo areto,?Don alras, or hilip ic"steed, for instance. %hese st!dies inc!rred an !ps!rge in the lastthird of the 24th cent!r&, notabl& with anal&ses of interdependent !tilities# motivated b&affection, compassion, or a sense of :!stice, and of reciprocities. Altr!ism also relates to thefield of normative economics and social choice# since caring abo!t the 7!alit& or fairness ofsociet& implies caring abo!t other persons. %hese st!dies seem to have proved that the generalconcepts and methods of economic anal&sis can be ver& helpf!l for the st!d& of altr!ism,giving, and reciprocit&, provided that the relevant motives, sentiments, and t&pes of relationsare ade7!atel& considered.

%he present introd!ctor& chapter aims at providing the necessar& basis for theeconomic anal&sis of altr!ism, giving, and reciprocit&. ts core is the second of its three parts,which presents the vario!s t&pes of altr!ism and of giving, whose specification is necessar&for !nderstanding the phenomena !nder consideration. %he third part foc!ses on thenormative implications of altr!ism, giving, and reciprocit&, and on historical landmar"s of

1 Essay on the Gift , 1'2*.

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their anal&sis. %he first part presents main iss!es abo!t the economics of altr!ism, giving, andreciprocit&.

%his first part presents, in partic!lar, the social importance and the scope of the vario!s"inds of relations of giving and altr!ism (-ection ') the vario!s str!ct!res of altr!istic

concerns for others and of their interdependences (-ection $) the motives and str!ct!res ofnon altr!istic giving (-ections / and 6) an o!tline of the 7!estion of reciprocities (-ection 8)the iss!e of the efficient crowding o!t of altr!istic :oint giving b& transfers of p!blic aid(-ection ) the reactions of giving to transfers, and in partic!lar the 7!estions ofintergenerational transfers thro!gh be7!ests and the p!blic debt, and of giving ind!ced b&redistrib!tion (-ection 14) the relation between selfish and altr!istic motives and cond!cts(-ection 11) and the origin of altr!ism (-ection 12).

Altr!ism and giving have man& different t&pes which, however, divide into maincategories. Altr!ism is hedonistic (or nat!ral), or normative. edonistic or nat!ral altr!ismincl!des affective altr!ism (affection and the milder s&mpath&), p!re hedonistic altr!ismwhich is either empath& or emotional contagion, and moral hedonistic altr!ism which incl!descompassion and pit&. 5ormative altr!ism refers to int!itive# moral val!es and norms, to nonmoral social val!es and norms, and to rational moral principles (e.g., impartialit& and :!stice,!niversali ation s!ch as GantHs, or p!tative reciprocit&).

All t&pes of altr!ism can motivate giving and helping. Eet, giving and helping can alsores!lt from other motives, which are to obe& intrinsic norms or to ind!ce vario!s socialeffects, or are more p!rel& self interested. %he social effects of giving can consist of :!dgments or sentiments (praise, esteem, stat!s of virt!o!sness, gratit!de, affection), socialsit!ations (giving can res!lt from or create both a higher or lower stat!s), and social relations(peace, goodwill, agreement, friendship, li"ing, and en:o&ing the social interco!rse). +ivingcan also favo!r the self interest of the giver thro!gh vario!s effects which can be ret!rn gifts,rewards of vario!s origins, conse7!ences of stat!s, or indirect effects thro!gh mar"ets or political or other social processes.

%he most important effect of altr!ism is probabl& the respect of other persons and theirrights and properties, which co!ld not s!fficientl& and well be sec!red onl& b& self defenceand the police. %his permits peace, social freedom defined b& this respect B it is the basicsocial ethic of o!r societies B, and the general amenit& of societ&. %his respect is in partic!lara condition of a wor"ing mar"et s&stem. oreover, f!rther norms of cond!ct and reciprocities provide the spontaneo!s correction of vario!s mar"et fail!res and of similar potential

deficiencies of organi ations (&et, coll!sions and reciprocities also sometimes create mar"etfail!res). Families constit!te of co!rse a prominent field of displa& of the sentiments andcond!cts !nder consideration. %he economic effects of be7!ests are partic!larl& important.Finall&, altr!istic care for alleviating miser& leads to charit&, which is important in somesocieties, and also to political s!pport of the large fiscal transfers where this motive associateswith a sense of :!stice (and the large n!mber of !ncoordinated givers ma"es p!blic transfers a priori the efficient means).2

2 an& 7!estions considered in this introd!ction have been disc!ssed with =ean ercier Ethier,sometimes for a long time. =ean also read in detail and commented the te0t, in proposing man&improvements alwa&s relevant and often adopted.


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I GENERA !"ER"IE#

$% &he economics of moral sentiments

ne of the best "nown and most often 7!oted of all te0ts is the first lines of the first boo" onsociet& of the fo!nding father of economics, Adam -mith3

Chap. I

Of Sympathy

How selfish soever man may e suppose!, there are evi!ently some principles in his nature,which interest him in the fortune of others, an! ren!er their happiness necessary to him,thou"h he !erives nothin" from it e#cept the pleasure of seein" it. Of this kin! is pity orcompassion, the emotion which we feel for the misery of others, when we either see it, or arema!e to conceive it in a very lively manner. That we often !erive sorrow from the sorrow ofothers, is a matter of fact too o vious to re$uire any instances to prove it % for this sentiment,like all the other ori"inal passions of human nature, is y no means confine! to the virtuousan! humane, thou"h they perhaps may feel it with the most e#$uisite sensi ility. The "reatestruffian, the most har!ene! violator of the laws of society, is not alto"ether without it.

(The Theory of &oral Sentiments, art 1, -ection 1, Chapter 1).

-mith wo!ld probabl& want his remar" to appl& even to economists. owever, latereconomists wo!ld prefer to e0press it in a spirit of geometr rather than in -mithHs spirit of

finesse # or s!btlet& (as Ilaise ascal p!ts it). %he& wo!ld represent the higher or lower levelof happiness of individ!ali b& the val!e of an ordinal !tilit& f!nctionu i, and write theinfl!ence emphasi ed b& -mith as

uiJ u i(u 'i , #i), (1)whereu 'i JKu (L ( i is the set of the levelsu ( for all individ!als (i, and #i denotes other factors ofindivid!al iHs happiness, incl!ding her own cons!mption.$ %he !niversal sentiment described b& -mith ma"es eachui be an increasing f!nction of eachu ( for all (i, partic!larl& for lowlevels ofu ( representing individ!al (Hs miser&. -mith even sa&s that s!fficientl& high levels ofu ( for (i are necessar to individ!ali, which can probabl& be translated as necessar& forui to have a s!fficient level. %he specific sentiment -mith has in mind does not even allow thatsome u i does not depend on someu (, b!t the infl!ence ma& have vario!s magnit!des.

alevolence, malice, scha!enfreu!e , env&, and even plain indifference to othersH pain or :o&,are other topics and are probabl& s!itabl& considered as pathologies of h!man sentiments.* owever, we sho!ld never forget that, as histor& teaches !s, it is also a fact that practicall&

an& h!man being can ver& easil& "ill others if he has been s!fficientl& pers!aded that the& aredifferent from him and no0io!s to his societ&. an is capable, towards his fellow men, of thedeepest love and the most admirable sacrifice, as well as entrenched hatred and the mostatrocio!s cr!elt&, and an&thing in between. %his vol!me, fort!natel&, restricts its concern toaltr!ism and giving B incl!ding reciprocit& that the social science classicall& defines as a setof related gifts.of )eciprocity, Givin" an! *ltruism , 2444, ?ondon, c illan, for the nternational 9conomic

Association).$ -ee Golm 1'66a.* %he economics of env& and other comparative social sentiments is presented in Golm 1''/.

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%he main importance of altr!ism, giving, and reciprocit&, is that the& constit!teessential facts of societies, which "eep them together, are basic aspects of them, provide someof their main properties, and infl!ence all other aspects. %he& appear in general socialit& andthe general respect of people and their rights, in families, in all gro!ps or comm!nities, in

wor"s of charit&, and in and thro!gh political life and p!blic polic&. %he& are importantl& andsometimes cr!ciall& enlightened b& their economic anal&sis, and the& are essential in thewor"ing and performance of the economic s&stem. %he& both permit e0changes and remed&their vario!s fail!res. 9ven in "eeping to the most s!perficial aspect B n!mbers B, privatecharit& transfers some /M of +5 in the >-. owever, this :oint giving to the poor and need& people is a p!blic good and we will see that efficienc&, democrac&, consistenc&, and moralsdemand that it be reali ed b& p!blic transfers3 this is indeed the case for several times thisamo!nt in most co!ntries. oreover, gifts to children in ed!cation and be7!est acco!nt forabo!t 84M of savings, and hence of investment, capital acc!m!lation, technical progress, andgrowth./

'% (otives for altruism and altruistic giving

Altr!ism is the preference for the good of some other people in itself, and it also denotesacting in favo!r of this good for this motive. t has more ca!ses or reasons than noted in-mithHs introd!ction. -mith notescompassion and pity . e later mentions a sentiment whichis a "ind of what we now call B after a0 -cheler Bempathy from imagining oneself in the place of the other person. e also s!ggests aconta"ion of emotions (-pino a;s imitatioaffectuum ). %he term sympathy he emplo&s rather means nowada&s a wea" "ind ofaffection or likin" (altho!gh it is et&mologicall& 7!ite close to compassion). %he ind!ced emotions aregenerall& of a different nat!re and lower intensit& than those of the observed ones, &et in being similarl& agreeable or disagreeable and similarl& more or less intense. %hese effectsconstit!te he!onistic (or natural ) altruism . owever, if these sentiments ma"e &o! desire thegood of other people beca!se this a!gments &o!r pleas!re or diminishes &o!r displeas!re, as-mith has it, this is not a moral reason in partic!lar this is not a moral motive for helpingother people. Eet, there also e0istmorals that ma"es &o! desire the good of other people, assome non moral social norms can also do (the difference between both is in partic!larrevealed b& the sentiment ind!ced b& fail!re to abide b& the r!le3 g!ilt in one case and shamein the other) these two t&pes of motives constit!tenormative altruism . All these sentimentsind!ce &o! to help the other person or to give something to her when the cost is compensated b& the relief, pleas!re, or sense of moral or social properness that these sentiments ind!ce in&o! as a conse7!ence of the res!lting relief or pleas!re of the beneficiar&, or of other

improvements in her sit!ation.owever, altho!gh empath&, compassion, pit&, s&mpath&, or affection, as ca!ses of

altr!ism and giving, are not moral ca!ses, the& nevertheless are commonl& considered asmoral in themselves. ndeed, morals demand not onl& that &o! help others b!t also, if possible, that &o! feel the corresponding altr!istic sentiment. %he& demand that &o! feelcompassion or pit& and val!e that &o! show sincere s&mpath&. %he& occasionall& demand that&o! practice empath&. %he& demand that &o! both help and li"e other people in a wa& andintensit& that depends on the pro0imit& and t&pe of &o!r relation, in partic!lar in the famil&and in comm!nities of vario!s t&pes. n a more demanding version, however, morals demand,on the contrar&, that &o! both treat and li"e other people e7!all&, that is, that &o! behave

:!stl& towards them. %he& also sometimes demand that &o! help and li"e some others, or all/ -ee Gotli"off and -!mmers (1'81), and +ale and -cholt (1''*).

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others, as &o!rself# (which is again :!stice), or even more than &o!rself B as A!g!ste Comte!nderstood the terms altr!ism# and altr!ist# when he introd!ced them. And man& gro!pssociall& val!e that &o! ind!lge in emotional contagion.

orals incl!de :!stice and fairness B altho!gh non moral social r!les also incl!de

vario!s norms of fairness. +iving and e0change are the two "inds of free transfers, b!t givingalso affects the distrib!tion of wealth, income, or cons!mption in societ&. +iving th!s elicits :!dgments of distrib!tive :!stice, and also the most ac!te conflicts among them. +iving to&o!r children, notabl& thro!gh be7!ests and ed!cation, res!lts from &o!r affection and &o!rright to freel& !se &o!r reso!rces, and &o!r parental love, &o!r right, and &o!r s!pport are all praised or approved of b& basic social and moral val!es. Eet, from the point of view of the beneficiaries, these grants are not allocated according to need, merit, or e7!alit&. Eo!rchildren onl& too" the pain to be born,# as Iea!marchais p!ts it. %his is the main so!rce ofine7!alit&, and the paragon of ine7!alit& of opport!nit&. I& contrast, giving to the need& people or to the poor satisfies basic needs and tends to red!ce ine7!alit& than"s to a freechoice of the giver.

An& sense of :!stice or fairness implies caring abo!t the good of other persons, that is,altr!ism. And an& consistent altr!ism towards several persons in a world of scarcities facesthe 7!estion of distrib!tive :!stice. Conversel&, a sense of :!stice necessaril& implies altr!ism,even if &o! !se it to defend &o!r interest. ndeed, :!stice being impartial b& nat!re anddefinition, if &o! claim it for &o!rself it has to be for some ob:ective# reason which alsoapplies or co!ld appl& to other people (note that if &o! ma"e !p this arg!ment for the sole p!rpose of defending &o!r interest, that is, &o! are a pharisian , this implies that &o! believethat it ma& have an infl!ence, and hence that some other people have the correspondingaltr!ism). %his str!ct!re is basic for Adam -mith, who emphasi es that impartialit& impliesaltr!ism B and empath& favo!rs impartialit&. e describes o!r capacit& to be impartial b& thes!ccessf!l image or concept of the impartial spectator# that each of !s harbo!rs in her breast.# =ohn -t!art ill even sees all altr!ism as the res!lt of impartialit& (which, however,he sees as the restricted and problematic form of a !tilitarian val!ation of the s!m of !tilities).Eet, &o! appl& &o!r opinions abo!t :!stice or fairness sometimes in individ!al giving, b!toften in attempts to pers!ade b& disc!ssion and to infl!ence p!blic constraints thro!gh political participation. ndeed, :!stice or fairness often implies a constraint on some peopleand, in a state of law, the p!blic sector has the monopol& of the legitimate constraint on ad!lts(apart from self defence).

)% *tructures of altruism

%he set of relations (1) for alli has ver& important conse7!ences and a few possible variants,which will shortl& be considered. ndivid!ali wants to give to individ!al ( in transferringgoods from #i to # ( if this s!fficientl& increasesu ( (pl!s other indirect effects) forovercompensating, inu i, the decrease ofi;s goods in #i. %he interdependence of !tilities#shows that each individ!al;s happiness# (or !tilit& level) or cons!mption is, in economic parlance, an e0ternalit for each other, and a collective concern or p!blic good# for allothers. A priori, this s!ggests that it sho!ld be a concern of the social, collective, political and p!blic level and sphere of action. %here is also m!t!al concern between individ!als (b!t thisis not the standard concept or reciprocit& B shortl& considered B which relates either the gifts both wa&s or the f!nctionsu i(u () and u ((u i), rather than the levels of !tilit&, income or

cons!mption). %he set of e7!ations (1) can be solved for theu i in givinguiJ vi( #) where #JK # (L


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is the set of the # ( for all (.6 ?ow levels of altr!ism (u i depends little onu () ind!ce a !ni7!esol!tion. owever, high m!t!al concerns (dependence between theui) can lead to m!ltiplesol!tions s!ch that some are worse for ever&one than others, incl!ding among stable stateswhen a d&namics of ad:!stment is considered B this prod!ces classical sit!ations in gro!pss!ch as co!ples or families which are st!c" with m!t!all& created miser& or are engaged in

d&namics of worsening relations (for instance withu i(u () and u ((ui) for a co!ple).ther reasons for the concern for others sometimes lead to different str!ct!res. oral

paternalistic# conceptions see the good of an individ!al in something other than herhappiness, and conceptions of :!stice also often consider as relevant other items concerningan individ!al than her happiness. %hese reasons ma"eu i depend directl& on individ!al (;scons!mption or sit!ation, sa& # (, and one can haveu iJ ui(u i, #) where #JK # (L is the set of # ( forall (. %his can even becomeui( #) if individ!al i is no longer directl& concerned with others;!tilities# or happinessu 'i . Eet, a sentiment of comparative :!stice abo!t the distrib!tion ofhappiness B or of the social val!e of some e!demonistic aggregate B can ma"e individ!ali beconcerned abo!t the setu of all u (, incl!ding ui, th!s leading to the formsuiJ u i(u, #i) or u iJ ui(u,

#).

Finall&, what ma& be relevant, concerning #i, is some concept of individ!al welfare ofindivid!al i, represented b& an inde0wiJ wi( #i) B areto;s ophelimit B, or the income yi ofindivid!al i with which she freel& b!&s the goods she !ses.

ossibl& res!lting forms areuiJ u i(u i,wi) solved asuiJ vi(w) wherewJKw (L denotes theset of thew ( for all (, or directl&u i(w). %hese are partic!lar forms.8 Eet, the latter is proposed b& ilfredo areto in his article of 1'1$ Il &assimo !i utilit+ per una collettivit+ in sociolo"ia # (also reprinted as a long footnote in hisTreatise of Sociolo"y and in &in! an!Society ), and Esidro 9dgeworth had considered in &athematical sychic (1881) the partic!larcase of two individ!als and linear !tilities,u1J w1Nw2 and u2J w2NOw1.' Ioth a!thors notethat, with increasing s!ch f!nctionsu i, areto efficienc& relative to the !tilitiesu i implies

areto efficienc& relative to the ophelimitieswi, b!t there are ophelimit& areto efficientstates that are not !tilit& areto efficient. %his is described b& 9dgeworth as a shrin"ing ofthe contract c!rve# in the space of the goods in the #i. 5ow, competitive mar"ets sec!re

areto efficienc& with ophelimities onl&, whereas the ethicall& meaningf!l propert& is aretoefficienc& with !tilities. ence, competitive mar"ets sec!re this latter propert& solel& withsome restriction on the distrib!tion of reso!rces, and the& ma& have to be accompanied b& theappropriate redistrib!tion.14 %he redistrib!tions that can have this effect can be favo!red at!nanimit&, than"s to altr!ism. Compassion, pit&, or a sense of :!stice !s!all& ma"e them

redistrib!te towards the poorer and diminish ine7!alit&. eople co!ld a priori decide this b&

6 %his sol!tion of the set of interdependent !tilities is disc!ssed in detail in Golm 1'66a (see also1'8*a). %hese m!ltiplicities, d&namics, and stabilit&, are anal&sed in Golm 1'8*a.

8 %he f!nctionu i(u 'i , #i) can be replaced b&ui(u 'i , wi) when the ordering of instances of #i b& f!nctionui does not depend on the levelsu ( for (i. %he f!nctionsu i( #) can be replaced b&u i(w) when the orderingof instances of # ( for each ( b& f!nctionu i depend neither on the #k for k ( nor on i.' areto writes the relation in differential form!u iJ a i(!w (. owever he notes that the coefficientsa i( are not constant and depend on the sit!ation. oreover, he do!btlessl& considered these differential

forms as integrable (&o! cannot climb !p the B smooth B hill of pleas!re# along non integrable paths).14 -ee also Golm (1'6$), inter (1'6'), Collard (1' /), Archibald and @onaldson (1' ).

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direct agreement between themselves, b!t, generall&, their n!mber precl!des this sol!tion and,therefore, the redistrib!tion has to be made b& the p!blic sector (see -ections * and ).

areto;s altr!ism withu iJ ui(w), or more general altr!istic formsuiJ u i(w i, #i) wherewiJKw (L (i is the set of thew ( for (i, differ from the formsu iJ ui(u i, #i) or u iJ ui(u i,wi) b& the

ass!mption that individ!al i derives no pleas!re from the pleas!re that other persons derivefrom the pleas!re of other persons, or that she finds this pleas!re of hers or of other people to be irrelevant for her choice ma0imi ingu i. %his is at odds with the view of the apostle of themoralit& of pleas!re, =erem& Ientham, who asserts that the pleas!re that others derive fromthe pleas!re of others e0ists and sho!ld be co!nted. %hat is, however, for the social ethical p!rpose of ma0imi ing the !tilitarian s!m which Ientham th!s ta"es asui (whereas mostmodern !tilitarians wo!ld prefer the other alternative in !singwi). Eet, areto also considersa social ethical ma0imand above individ!als; !tilities or ophelimities. owever, he re:ects thes!m of !tilities beca!se we can neither compare nor add them, beca!se we ignore the ratio of!nits in which the& are e0pressed.#11 e th!s considers more general non linear social

welfare f!nctions# of the form-

(u), th!s ass!ming the moral val!e of the pleas!re that people derive from the welfare of other people, if not from their pleas!re (&et, areto had !sed

a form (w) in hisCours !/Economie oliti$ue (18' ), b!t this can be reconciled with hislater view as being (w)J - Pu(w)Q).

?argel& 7!oting areto, Abram Iergson considers social welfare f!nctions# ininsisting on the fact that the& represent the social ethical views of specific individ!als, be the&advisors,# officials,# or the economist,# and which are, with the previo!s notations, i(w)(1'/*) or - iPu( #)Q (1'66) wherei is the inde0 of one s!ch individ!al (this inde0 is e0plicit inthe first reference and implicit in the second). %he first form!lation is also formall& a"in to the

aretian !tilit& of individ!ali. owever, the s!rest thing abo!t Iergson;s ma0imands is that

the& intend to describe moral views. 5othing is said abo!t the place of individ!ali;s partic!lar satisfaction that she derives from her own cons!mption or from her children;s. 5evertheless, these f!nctions are increasing in all their arg!ments, which implies a t&pe ofaltr!ism of individ!al i. %his altr!ism is of the moral "ind, contrar& to the altr!ism described b& Adam -mith as deriving from empath& or emotional contagion (that which he callss&mpath) and is of a hedonistic# or nat!ral# "ind B &et, -mith also later anal&ses d!t& .12

Finall&, one can consider preferences abo!t income distrib!tion. owever, this has to be :!stified, notabl& with respect to two essential iss!es (see Golm, 1'66a). First, the incomesin 7!estion sho!ld be defined when reso!rce !ses are variable and notabl& in the commoncase where the& incl!de earned incomes and labo!r can var&. -econd, the set of aretoefficient income distrib!tions is ver& large when most altr!isms are wea", which is the case ina large societ& (nations for instance). ence this concept is of little !sef!lness in itself forspecif&ing the sociall& desirable distrib!tions. %herefore, one sho!ld consider more finel&individ!als; preferences abo!t the distrib!tive str!ct!re and their possible scope of consens!s,and normative sol!tions for specif&ing the desired distrib!tion.

f individ!ali b!&s her b!ndle of cons!mption goods with income yi and a given pricevector p i (which ma& a priori depend on individ!ali, for instance if one good is leis!re bo!ghtin wor"ing less at a price which is individ!ali;s wage rate), then relation (1) can be written as

11

Cours !/Economie oliti$ue , , p.24. %he iss!e of the strong limitation of the logical possibilit& of!sing a !tilitarian s!m is presented in Golm 1''6, Chapter 1*.12 All the reasons for being concerned b& other persons can be :ointl& present in Golm 1'66a.

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uiJ iuR (u 'i , yi, p i), and if this holds for alli a sol!tion of this s&stem (with the same disc!ssionas above) can beuiJ vi( y, p), where yJK y (L is the set of the y (, and p is the set of the pricevectors p i. ne ma& also have directl&uiJ iuR ( y, p) if individ!al i considers that individ!al ( isresponsible, and hence acco!ntable, for the goods she b!&s with her income yi, and isacco!ntable for her tastes which enable her to derive satisfaction from her cons!mption.-imilar final forms can also res!lt from deriveduiJ vi(w) or directuiJ u i(w) in writing theindirect (


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t&pes of relations between them, and sometimes incorporated in the same overall eval!ation.As an e0ample of the second case, for social ethical :!dgments that deem individ!als to be both responsible for spending their income in free e0change and acco!ntable for theircapacities to be satisfied and other needs, the relevant variables are incomes y (, one can write0 i( y)J ),(R y y0 ii where the second (vector ) arg!ment y is the ob:ect of the social ethicaleval!ation, and i0 R as f!nction of this arg!ment y is increasing for e0pressing benevolence,s&mmetrical for e0pressing impartialit&, possibl& a!gmented b& transfers from rich to poor(i.e. rectifiant,# hence -ch!r concave with the s&mmetr&), var&ing in specific wa&s !nderspecific changes of y, and so on. %he retained set of properties determines a specific str!ct!refor 0 i, for !se in applications.1

%he above noted interdependences appl& to sets of individ!als constit!ting vario!sgro!ps or societies, of all possible t&pe and si e, from the d&ad (sometimes a co!ple), smallgro!ps (families or others), larger gro!ps (e.g. some organi ation or categor& of people),nations (in which a large part of redistrib!tions motivated b& overall :!stice ta"e place), or thewhole world. A specific model can describe p!re sentiments or mi0ed ones. n the latter case,the f!nctions incorporate the effect of the s&nthesis of their vario!s sentiments b& theindivid!als (this can be smooth associations or compromises among desires or d!ties or theo!tcome of a tempest !nder a s"!ll# as ictor !go p!ts it). %he f!nctions can be !sed foreval!ating the state of the societ& !nder consideration B possibl& for choosing p!blic actionabo!t distrib!tion B, or for providing a step in e0plaining or forecasting the cond!ct of people,incl!ding in interactions, giving, or voting.

owever, the models constit!ted b& the noted f!nctions e0pressing individ!als;concerns abo!t others are limited when ta"en b& themselves, and sho!ld be completed orincorporated in other models, in two essential respects concerning eval!ation and action,

respectivel&. First, individ!als; eval!ation of the distrib!tion (of goods, incomes, welfare, orhappiness) often depends on specific facts or acts, and often on the past, and the relevantvariables or parameters have then to be introd!ced or made e0plicit when a more advancedanal&sis is so!ght or re7!ired. For instance, an individ!al ma& be tho!ght to deserve or meritsome good, income, or satisfaction beca!se of specific acts or choices of hers (e.g., labo!r,effort). ndivid!al needs ma& be relevant and ma& have to be more e0plicit than onl&incorporated in the str!ct!re of !tilit& or welfare f!nctions (e.g., famil& si e, health, age). Anindivid!al ma& be entitled to an income or a good beca!se she has earned it, or beca!se it has been given to her (basic social freedom or process liberalism). An individ!alHs concern abo!tothers generall& depends on their social relation to her it is in partic!lar more intense whenthe social distance# between them is shorter (e.g., famil&, e0tended famil&, belonging to the

same gro!p of vario!s possible "inds, in partic!lar to the same nation).

%he second iss!e is that individ!als act in different conte0ts, each of which mobilises a partic!lar set of sentiments and motives, with often a dominant (sometimes !ni7!e) sentiment.For instance, self centeredness is dominant in mar"et e0changes (this is hilip ic"steedHsnon t!ism# B see -ection 11 below) altho!gh fairness, promise "eeping and tr!th telling alsohave important roles in these interactions. Families are the instit!tions for love and giving,altho!gh the& displa& also all other possible "inds of social sentiments. Charit& is s!pposed to be motivated b& pit&, compassion, and solidarit& altho!gh we will see that if the& were theonl& motives, private charit& sho!ld be replaced b& p!blic transfers. %he variet& of motives atwor" in the political and p!blic sectors incl!de some altr!ism and sense of :!stice, notabl& in1 -t!dies that !se specific str!ct!res of f!nctions 0 i witho!t :!stification, hence arbitrar& str!ct!res,

prima facie transmit this shortcoming to their concl!sions.

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militanc& and to some degree in voting (see -ection '.$). -olidarit& is often partic!larl&important within cl!bs and associations. ence, the effects of the vario!s t&pes of sentimentsand attit!des towards other people and societ& are in a large part segmented among vario!sattit!des and t&pes of relations, altho!gh in each case other, possibl& second order, sentimentsoften also pla& important roles.

%his more or less segmented aspect of h!man life into vario!s activities, and of7!estioning abo!t the world into diverse iss!es, gives practical relevance to the 7!estionwhether an individ!al is B or is better represented as B a single, integrated self, or severalselves, one for each activit& or 7!estion. 9ach s!ch self can be considered as endowed withone preference ordering or !tilit& f!nction. 9conomists tend to have a preference for thesingle, integrated self, who in partic!lar chooses among different alternatives possibl& inchoosing or compromising among vario!s interests or val!es. owever, individ!als; socialethical val!es are often considered separatel&, b& a proper ordering of eval!ation f!nction.%his is probabl& the meaning of Iergson;s social welfare f!nction, and what the field ofsocial choice calls individ!al val!es. =ohn -t!art ill and ?Don alras see the individ!al aseither self interested or altr!istic and moral according to the moments. And vario!s modelsfoc!s on specific sentiments for anal&sis or application.

+% Altruism and democracy Altruistic -oint giving and its pu.lic implementation

An improvement in individ!al (;s sit!ation # (, for instance an increase in her cons!mption orincome, increasesu ( or w (, and hence also altr!isticu i for i (, possibl& with indirect effects inthe first form!lation (ui depending on u 'i ), and it ma& also increaseu i directl&. %his ma"esindivid!al i give to individ!al ( if this effect overcompensates for her the corresponding lossand the worsening of #i. owever, as -mith emphasises in the second paragraph of theTheory , the increase in satisfaction that an individ!al derives from an improvement inanother;s sit!ation is generall& lower than the increase in satisfaction she wo!ld inc!r if thisimprovement were in her own sit!ation.18 ence, this altr!ism does not generall& lead to giftgiving, or it does onl& when the other is s!fficientl& miserable B and in a rather small amo!nt B or for the few people partic!larl& close to the giver s!ch as the members of her famil&. Eet,an individ!al;s happiness (u (), welfare (w (), or sit!ation ( # (), and gifts that improve them, are a priori favo!red b& all other individ!als. %he& are p!blic goods# for them. ence, if theseothers co!ld agree that each gives to individ!al (, each co!ld find that her own contrib!tion isworth the overall improvement in # ( or u (. %his individ!al contrib!tion ma& be small if theindivid!als are n!mero!s. Act!all&, individ!als are ver& n!mero!s, and hence onl& ver& lowdegrees of altr!ism s!ffice. %he set of transfers wo!ld then be favo!red !nanimo!sl&.

%he givers can implement this res!lt in ma"ing a collective agreement abo!t theirgifts. As for an& other contract, this agreement wo!ld be enforced b& the legal s&stem and the p!blic force. owever, when the& are n!mero!s the& cannot, practicall&, enter into thenecessar& contact and bargaining. %hen, it is a role of the p!blic sector to reali e neverthelessthis set of transfers !nanimo!sl& desired. As in the implementation of an& contract, eachindivid!al is forced to &ield her contrib!tion, altho!gh she prefers the whole set of transfers toits absence B if the contrib!tions of the other individ!als are given, she prefers to &ield less ornot at all. I!t since there is no act!al contract, this forced contrib!tion appears as a ta0. n thischoice, the p!blic sector can either tr& to ma"e o!t what the collective agreement wo!ld have18

-mith interestingl& e0plains that individ!ali tends to consider the f!nctionuiPu (( # ()Q asUu i( # () withV1, in p!tting herself in the other;s shoes# concerning her sit!ation (rather than also her propensit&to en:o& or s!ffer), and in disco!nting the intensit& of the effect.

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been if it were possible (this is a liberal social contract#), or introd!ce other conceptions ofdistrib!tive :!stice (since this is another of its f!nctions) (see -ection 16).

ence, s!ch a s&stem of redistrib!tive ta0es can be !nanimo!sl& preferred to itsabsence. %hat is, its absence is not areto efficient. 5ow, a democratic political s&stem

normall& sec!res areto efficienc&. For instance, even with the imperfect democrac& of o!relectoral competition, an& political program that is not areto efficient can be defeated b&other possible programs at the !nanimit& of e0pressed votes, b& the ver& definition of this propert&. ence, a democratic political s&stem will reali e the s&stem of redistrib!tive ta0esmanifesting !nanimo!sl& desired altr!istic :oint giving.

%he necessar& p!blic implementation of :oint giving has been noticed for a long time.For instance, rivate charit& is ins!fficient beca!se the benefits from it accr!e to peopleother than those who made the giftW e might all of !s be willing to contrib!te to the reliefof povert&, provi!e! ever&one else did. e might not be willing to contrib!te the sameamo!nt witho!t s!ch ass!ranceW# And this :!stifies government action to alleviate povert&.# ( ilton Friedman,Capitalism an! Free!om , 1'62). ?ogic, in fact, goes f!rther thanthat, as we will shortl& see, since it concl!des that onl& government sho!ld alleviate povert&in a democratic, efficient, and altr!istic societ& (-ection ).

ence, when private giving to the poor is observed, either the motives are notaltr!istic, or the societ& is not democratic and is inefficient (and the waste concerns aid to theneediest).

5one of these alternatives is r!led o!t, which shows a scope for both political andmoral progress. n partic!lar, there are man& other possible reasons for giving to people inneed than to alleviate povert& and s!ffering. -ome of these motives lead to e0actl& the sameconcl!sion3 efficienc& and democrac& re7!ire p!blic aid (for instance if the giver cares abo!thaving the a!ra of an altr!ist in her e&es or in the e&es of other people and hence behaves li"eone, or if she cares specificall& abo!t her own contrib!tion B private gift pl!s redistrib!tiveta0 B beca!se the& constit!te her sacrifice for the poor). Eet, other motives permit privategiving in democrac& b!t, then, the& are often rather immoral and inconsistent.

All these possible motives are, indeed, varied. %here can simpl& be a norm for givingin itself, witho!t specific regard for the beneficiar&;s welfare provided the gift goes this wa&.%his norm can be moral, or onl& social in bowing to p!blic opinion. +iving ma& even be atradition or a habit. %he individ!al ma& care abo!t :!dgments abo!t herself b& other people or

b& herself. %his :!dgment can b!ild an image of the person. %his :!dgment, however, canfoc!s on vario!s items. %he f!ll moral :!dgment is the praise for being an altr!ist. Eet, thisma& not s!ffice for s!fficientl& infl!encing the person;s motive, and th!s ind!cing her toact!all& become an altr!ist. %hen, the :!dgment can withdraw to the praise of behaving li"e analtr!ist, which ind!ces the same behavio!r and effects as if the person were act!all& analtr!ist. %he :!dgment ma& also foc!s on more partial items, and then it is rather inconsistentas a moral :!dgment. n partic!lar, it can appreciate the individ!al;s sacrifice in favo!r of the poor, that is her f!ll contrib!tion thro!gh private giving and ta0ation B we have seen that thisfails to ind!ce giving. I!t the :!dgment can also emphasi e the responsibilit& of the giver,and hence onl& her private gift, e0cept if the ta0 represents an implicitl& desired contrib!tionto the :oint giving B and then it again has to be added to the gift. oreover, people ma& be

motivated b& comparisons abo!t the private gifts or the total contrib!tions of themselves andof other people for several possible reasons s!ch as doing one;s fair share if others do theirs,

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"eeping !p with others, imitation, conforming, distinction, competition in giving orcontrib!ting, sentiments of inferiorit& or s!periorit&, env&, or :ealo!s&. %hese comparisonscan be the direct view of the person or that of others; :!dgments abo!t which she cares.Finall&, gen!ine altr!ism can be associated with principles of cond!ct which avoids the freeriding# of the :oint giving which ma"es ta0ation the efficient sol!tion. A classical s!ch

principle is !niversali ation in the famil& of Gant;s categorical imperative B give in imaginingthat ever&bod& does li"e &o!. Another case is that of altr!ism motivated b& p!tativereciprocit, that is the reasoning help her beca!se she wo!ld have helped me if o!rsit!ations were perm!ted.#

/% (otives and reasons for nonaltruistic giving

ore generall&, giving is vol!ntaril& inc!rring a cost for the good of someone else, b!t thisma& onl& be a means for another end. n partic!lar, one ma& give for eliciting selfsatisfaction, praise, gratit!de, esteem, admiration, li"ing, or love (Adam -mith emphasi es thedifference between the moral desire to be praiseworth& and the immoral or at best amoraldesire to be praised) for gaining an a!ra of generosit& in one;s own e&es and in the e&es ofother persons whose :!dgment one val!es hence for ac7!iring or maintaining s!ch arep!tation or stat!s val!ed in itself or for the vario!s other advantages it ma& bestow or permit one to obtain. ne ma& give for showing and proving one;s friendship, affection,li"ing or love, which tends to elicit or reinforce the desired friendship, affection, li"ing or loveof the other person in ret!rn. also often give in given circ!mstances simpl& beca!se the& feelthe& have to do it, possibl& beca!se it is a tradition, in considering more or less the :!dgmentof their conscience or of other persons, b!t also sometimes b& p!re habit and inertia.

Eet, one also sometimes gives or helps to obtain tangible advantages b& indirecteffects thro!gh man& possible t&pes of social processes incl!ding rewards from anorgani ation (possibl& a firm) or the famil& B when the aid is within s!ch a gro!p B or from aninstit!tion (possibl& an official one) effects of ind!ced redistrib!tion political (for instanceelectoral) advantage indirect mar"et effects (s!ch as thro!gh the effects of transfers on termsof trade classicall& disc!ssed in international trade) and so on. n partic!lar, one ma& give foreliciting a ret!rn gift in a reciprocit& or for obtaining ret!rn gifts from actors other than theinitial receiver in a reverse reciprocit which is often presented as vastl& overcompensatingthe cost of the initial gift (b& Christianit&,


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both wa&s, and then sometimes materiall& identical. %hese gifts are varied, from pens and pinsto wives and cities, in passing b& the m!t!al gifts of identical rings, drin"s, or receptions.

eople also sometimes give for the mere interest of the relationship in the process of givingand receiving.

A gift can also soften a hostile attit!de. Eet, one classicall& gives both for showing as!periorit& over the receiver and on the contrar& for manifesting oneHs s!bmission towardsher and for glorif&ing the receiver or on the contrar& for h!miliating her (for instance ins!ggesting that she is !nable to ta"e care of her needs or of her famil&Hs). ther gifts intend toma"e the receiver morall& indebted towards the giver (for the stat!s in itself or for the possibilit& of demanding some service in ret!rn later on), or the& intend on the contrar& toredeem and erase a pending moral debt.

ne ma& finall& give for doing oneHs fair share in giving given that other contrib!torsdo theirs for conforming to othersH giving in a similar sit!ation of the giver and of thecirc!mstances for "eeping !p with other givers for not being h!miliated or ashamed b&giving less or not at all or on the contrar& for eliciting the admiration, possibl& the env&, oreven the shame or h!miliation of those who give less or not at all and for maintaining orcon7!ering a relative stat!s in generosit& or wealth, hence possibl& in engaging inconspic!o!s competitive giving (where the gifts are either !sed as in p!blic f!nd raisingoperations or ap!an pig feasts, or destro&ed as in the potlatch).

ence, the variet& of forms of the giving wa& of allocating reso!rces is bewildering.+ifts are provided with ver& different aims, and sometimes strictl& opposite ones. %he& rangefrom the most genero!s sacrifice to being the instr!ment of social sentiments and relationsamong the most odio!s, in passing b& the plain service of the giver;s self interest. %he& alsorange from the most spontaneo!s and even almost !nconscio!s act to res!lting from the mostelaborate pondering and strategies. %he& are both the proof of sincerit& and the classicalvector of h&pocris& and treachero!s lies. %he& are the free single transfers, b!t are alsosometimes insistentl& demanded b& strong social norms. %he& a priori concern two persons, b!t the& are often imbedded in networ"s of social relations. %he& loo" plainl& material, b!ttheir real nat!re is often in fact, rather, affection, demand of affection, gratit!de, 7!er&,ac7!iescence, confirmation, promise, vainglor&, or spite. %he variet& of the givingrelationship is matched b& its pervasiveness and cr!cial importance in societ&, as -ection 'will show.

9ven the main field of economics, mar"ets and e0change, when caref!ll& anal&sed,

reveals the essential role of motives that are not self interest, and hence conscio!sl& favo!rother people often as the res!lt of moral or social normative cond!cts. ndeed, first, man&relations of mar"et, e0change, agreement, and cooperation thrive in spite of the presence ofclassical ca!ses of mar"et fail!res which sho!ld have inhibited them, than"s to the role ofvario!s moral cond!cts s!ch as honest&, tr!th telling, promise "eeping, fairness, reciprocit&,tr!st and tr!stworthiness, respect, and benevolence. %his permits them to overcome costs andimpossibilities in information and comm!nication, e0cl!sion and constraining, bargaining andtransaction, and establishing and enforcing contracts, which ind!ce imperfect contracts,incomplete mar"ets, missing agreements, and free riding p!blic goods (bargaining is oftenconcl!ded onl& than"s to a fair compromise, or is replaced b& fair arbitration, and &o! often prefer a fair deal to a good deal vario!s contrib!tions to p!blic goods and collective action

are m!ch higher than p!re self interest leads one to e0pect most opport!nities to steal andcheat are not sei ed and so on). -imilar virt!es are essential in the life of firms and other

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organi ations, between members and between them and the firm, and the& are powerf!lfactors of their efficienc&. -econd, on the contrar&, these behavio!rs also interfere with theefficient price s&stem for instance, vario!s iss!es of fairness in the labo!r mar"et, amongemplo&ees or between emplo&ees and emplo&er, constit!te a main ca!se of wage rigiditiesand hence of macroeconomic problems. ther behavio!rs infl!enced b& norms and stat!s, or

see"ing stat!s or relative positions, also depart from standard economic models. %hird,vol!ntar& altr!istic respect of propert& and rights is a condition sine $ua non of the ver&e0istence and wor"ing of mar"ets (self defence is costl& and often impossible, and the policeis costl& and co!ld not be s!fficientl& present, informed, and effective).

0% &he structure of nonaltruistic giving

6.1 From motives to forms

5onaltr!istic giving is giving for a final reason other than the receiverHs good, or not onl& forthis motive. %he choice of the gift b& the giver can again be described b& the ma0imi ation ofa !tilit& f!nction (or, more generall&, b& finding the best possible element of a preferenceordering), altho!gh the interesting part is often the ps&chological, social or philosophicalanal&sis of the motives and of their properties and relations with other facts.1' ?et ui denote anordinal !tilit& level and f!nction of individ!ali, 1 i the initial endowment of goods ofindivid!al i, and " i( a gift from individ!ali to individ!al (. 1 i and " i( are defined as vectors of7!antities of goods (or services) in the space of the 7!antities of goods (the& can in partic!lar be one dimensional, notabl& meas!red in mone& as an income or wealth and an incometransfer, b!t this does not fit for all the cases). After the transfer of the gift " i(, individ!al i hasthe allocation #iJ 1 i B " i(, and individ!al ( has the allocation # (J 1 (N " i(. f individ!ali isconcerned abo!t her gift " i( onl& beca!se she has altr!istic sentiments (in addition to selfinterest), she chooses " i( that ma0imi esui( #i, # (,W)Ju i( 1 i B " i(, 1 (N " i(,W) whereui depends on # ( for the more or less direct or indirect reasons noted in -ection $. f individ!ali ma& give toindivid!al ( for other reasons, she chooses " i( that ma0imi es

ui( 1 i B " i(, " i(, S i)whereS i is the set of all relevant variables and parameters other than the first two arg!mentsof the f!nction. f individ!ali has also some altr!istic motives towards individ!al (, S i incl!des # (J 1 (N " i(. %he vario!s motives for giving " i( are related to vario!s elements of the setS i.

For instance, if " i( is a ret!rn gift of a reciprocit&,S i incl!des a gift " (i from individ!al (to individ!al i. 90tended reciprocities# ma"eS i incl!de " ki for somek i or ( in the case of a

generali ed reciprocit (&o! tend to help if &o! have been helped, even b& someone else,which is the classical helping behavio!r# of social ps&chologists), or " (k for somek i or ( inthe case of a reverse reciprocit (&o! tend to help meritorio!s people who help others, acase emphasi ed b& the philosopher


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5ote that ui is a priori an increasing f!nction of " k( if individ!al i has altr!isticsentiments towards individ!al ( and hence appreciates higher endowments of individ!al (

1 (N " k( or 1 (N " i(N " k(, b!t that u i tends to be a decreasing f!nction of " k( if individ!al i ismotivated b& giving " i( for conformit&, comparative stat!s, or competitive giving in

comparison with " k(.n all cases, what ma& matter are gifts in relation to the wealth of givers or receivers

(which can e0press a relative sacrifice of the giver or a relative contrib!tion to the receiverHswealth), and the form!lation allows this in incl!ding the relevant wealths in the setS i.

ndivid!ali is sometimes also motivated b& her image as giver, in the e&es of other persons or in her own e&es, and b& the associated :!dgment and stat!s. Adam -mith e0plainsthis own eval!ation of oneself b& empath& of the view of other persons :!dging oneself (or ofthe view of the impartial spectator). A priori, one ma& praise or critici e oneself witho!t thisdeto!r. owever, we will see that in the present case it practicall& happens to be necessar& Bwhich shows the depth of -mithHs insights. At an& rate, one can denote asik I the image ofindivid!al i in the e&es of individ!alk , and as k

ik

i I I = the set of the ik I for all individ!alsk . For k J i, ii I is individ!al iHs image of herself. ndivid!aliHs images as giver to individ!al (

depend on the gift " i(, )( i(ii " I I =

. ne partic!lar s!ch image of individ!al i is that of thereceiver (, i ( I , related to the beneficiar&Hs gratit!de (or resentment if she finds that " i( does notmatch her e0pectations). A concern of individ!ali abo!t her relative stat!s as giver can berepresented either b& the incl!sion of " k( (or " k ) for other individ!alsk among the factors ofthe images of herself ,i I or directl& b& the incl!sion of k I for k i as arg!ments ofindivid!al iHs !tilit& f!nction. %his f!nction then isu i( 1 i B " i(, ,i I S i) or ui( 1 i B " i(, I , S i) where I J{ }i I is the set of the images i I of all individ!als i, and S i is the set of other relevantarg!ments (one of them is # (J 1 (N " i( or 1 (Nk " k(, according to the case, if individ!ali also hassome altr!istic sentiment towards individ!al ().

n some cases, the gift " i( has indirect effects providing an e0tra allocation yk ( " i() toindivid!al k (which can notabl& bei or (). %hese indirect effects can have a n!mber of origins B economic, social of vario!s t&pes, etc. B disc!ssed in forthcoming -ection 1/.$ (notabl&concerning yi( " i()). %he yk are again vectors of 7!antities of goods, possibl& red!ced to a onedimensional mone& or income, and with the possibilit& of negative coordinates for describinga loss. %hen, in the foregoing form!la, 1 i'" i( has to be replaced b& 1 i'" i(N yi( " i() (and 1 (N " i( b&

1 iN " i(N y (( " i()). %he vario!s possible origins of the yk incl!des the well st!died effects thro!ghmar"ets, rewards of vario!s origins, and so on, b!t yi( " i() can also be (or incl!de) a ret!rn gift provided b& individ!al (, yi( " i()J y (( " i()J " (i( " i() where the last notation denotes the ret!rn gift.

n a n!mber of cases, yi can overcompensate the loss of the gift " i( and th!s ma"e giving profitable for the giver from a strictl& self interested point of view.

6.2 Contradiction and possibilities in the logic of motives

owever, &o! cannot give onl& to be praised or praiseworth& as an altr!ist, or for a moralaction, or in order to have an image or a stat!s as a moral person, beca!se ob:ectives of being praised or being praiseworth& are not moral in themselves, whereas a moral action re7!ires amoral intent, and an& altr!ism re7!ires see"ing the good of the receiver in itself. 9ven simpl&giving in order to be a moral person B and not onl& to act li"e one B ma& not be possible

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beca!se this is not a moral ob:ective in itself (&o! sho!ld, also, manage to direct &o!rintention towards a moral aim). Eet, acting with a res!lt that helps someone when this is notthe final ob:ective can nevertheless deserve some praise, b!t with a lower stat!s and intensit&.%his approval can be stronger if this action is costl& to the actor, as with giving. ndeed, evenif it is not a vol!ntar& act, a sacrifice that entails benefits for others can elicit positive

consideration. oreover, the nonmoral motive of vol!ntaril& helping someone else ma&nevertheless be normative, b!t in following a nonmoral social norm. %his is the "ind ofcond!ct the breach of which elicits shame rather than g!ilt. %hen, the :!dgment of other persons is of primar& importance (&o! sho!ld be ashamed of not helping &o!r brother#),altho!gh it ma& sometimes be onl& imagined (this is the case in -mithHs conception ofempathi ing the imagined :!dgment of other individ!als B or of the impartial spectator Babo!t oneself). Finall&, &o! ma& tr& to deceive other people in pretending to have gen!inel&moral motives, b!t this is specificall& against morals, and it re7!ires again other persons (in a personal, not anon&mo!s, gift, there is at least the receiver, b!t this is onl& one person andoften of too low a stat!s to be of importance in this role). n all these cases, the contradictionma& be soften if gen!ine moral altr!ism is one of &o!r motives, along with see"ing praiseworthiness, praise, image, or stat!s. owever, cognitive dissonance tends to ma"e thiscoe0istence of opposite motives ps&chologicall& !nstable, and sincere benevolence tends todeteriorate the possibilit& of efficient :oint giving B as we will now see.

1% &he inefficiency of individual giving when -oint or pu.lic giving is possi.le theperple2ing -oint giving theorem

=oint altr!ism where several individ!als want the good of the same individ!al(s) is notabl&important for helping the people in need or poor. e have seen in -ection * that in these casesefficienc& re7!ires :oint coordinated giving which, when the givers are n!mero!s, is achieved b& transfers of the p!blic sector. As we recalled, ilton Friedman has admitted that this is acase where p!blic transfers can be :!stified. Eet, a simple theorem sa&s, more precisel&, that

areto efficienc& precl!des the ver& e0istence of individ!all& chosen givings, s!ch as privatecharit&, and all the transfers sho!ld be thro!gh p!blic ta0es and s!bsidies. %his also holdswhen the potential givers are not onl& altr!ists in caring for the welfare of the aided people, b!t care also, or onl&, abo!t their own total contrib!tion to them (gift and ta0) in itself, for an&of the motives noted in the previo!s section, s!ch as see"ing praise or praiseworthiness, orimage or stat!s in oneHs e&es or in the :!dgment of other persons. (%his also holds when giverscare for all povert& b!t speciali e in the aid of some persons B the& have their poor#). %heAppendi0 at the end of this Chapter shows this :oint giving theorem,# and its vario!s res!ltswhich are simpl& mentioned here.24

%his theorem sho!ld be compared to facts. rivatel& decided charitable givingacco!nts for abo!t /M of +5 in the >-A. t is ver& m!ch lower in 9!rope. n both places, p!blic transfers of aid are s!bstantial. %he& are clearl& higher in 9!rope. e have remar"edabove that democrac& implies areto efficienc& (-ection *). ence, the :oint giving theorem, b& itself, s!ggests the starting and startling concl!sion that B possibl& contrar& to appearances B estern 9!ropean societies are less wastef!l and more democratic than the >-. And thewaste is first of all in the aid to the poor and need&.

Fort!natel&, however, a ne0t section of the theorem has it that an individ!al privatel&chosen giving can be consistent with areto efficienc& (and hence democrac&) if this

individ!al cares for her private gift specificall&, and not onl& beca!se it is a part of her24 A f!ller anal&sis is provided in Golm 244/.

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contrib!tion (along with her ta0es that aid the need&) which she wo!ld val!e in itself or beca!se it helps the need& or both. owever, if this person is to be appreciated beca!se of hersacrifice (in favo!r of the need&), it is her whole sacrifice that co!nts, her ta0 pl!s herindivid!al gift. %hen, to single o!t the private gift is irrational, and the alternative to lac" ofefficienc& and of democrac& is irrationalit&. oreover, disting!ishing one;s own gest!re for

boosting one;s image in one;s own e&es B =im Andreoni;s warm glow# B, or in the e&es ofother people B that is, for showing off and vainglor& B is hardl& moral. %his wo!ld also holdfor disting!ishing one;s own total contrib!tion (ta0 incl!ded) from its effect on the overallwelfare of the beneficiaries, b!t private giving ma& be singled o!t beca!se one;s ta0es are lessvisible to other people, distrib!tive ta0es are most often mi0ed with general ta0es for all p!rposes, or private responsibilit& is val!ed in itself (whereas it is the total contrib!tion thathelps the need&). At an& rate, high private giving reveals either shamef!l waste and a lac" ofdemocrac&, or irrationalit& and immoralit&. oreover, again, this waste is notabl& in the aidto the poor and need&. And the degree of immoralit& is s!ggested b& still another res!lt of the :oint giving theorem3 on average, an e0tra gift is provided 2 million times more for the glor&of the giver than for the relief of the poor, where 2 millions is the pop!lation of the co!ntr&. 5ote also that if these distrib!tive ta0es are comp!ted as the amo!nt that the pa&er wo!ldhave agreed to pa& in an agreement with her co givers, then the pa&er is also p!tativel&responsible for its amo!nt, there is no reason to disting!ish it from the private individ!al gift(see -ection 16./), and then the e0istence of private giving implies waste and absence ofdemocrac&.

owever, the individ!als are sometimes concerned not onl& abo!t their own specificgifts, b!t also abo!t those of other people, notabl& for comparison. %he& wo!ld for instanceenv& the generosit& of people who give more than the& do, or feel inferior to them, or on thecontrar& the& wo!ld feel s!perior to those who give less than the& do. %hese are hardl& nicersentiments, and hence it is reass!ring that this concern ma"es no difference for the aboveres!lts. Eet, there is a difference if s!ch concerns are not abo!t the specific gifts of theindivid!als b!t are abo!t their specific contrib!tion (gift pl!s ta0), which is more rational B inso far as env& and sentiments of s!periorit& are rational. %hen, indeed, another piece of the :oint giving theorem sa&s that an individ!al can give in efficienc& if the env& (or sentimentsof inferiorit& or s!periorit&) towards her are not lower than her altr!ism, on average.

f co!rse, other facts can intervene, three categories of which can be noted here. First,there are other sentiments comparing individ!als; contrib!tions or gifts, which have the sameeffect ass those noted b!t not the same moral implications. ndeed, these comparisons can bemotivated b& sheer imitation or desire to conform (desire for distinction ta"es !p bac" to the

previo!s cases), or b& the desire to do one;s share if other people do theirs. n these cases also,higher contrib!tions or gifts b& the others is costl& for the person. -econd, altr!ism can beassociated with or res!lt from other moral reasons which lead one to give irrespective ofothers; contrib!tions, s!ch as the noted !niversali ation and p!tative reciprocities (see -ection1$.$.$).21 %hird, fiscal modes can intervene. %a0es are generall& not l!mp s!m (with theres!lting disincentive effects and the waste of the b!rden of ta0ation# which :eopardi es

areto efficienc&). rivate donations can be ded!ctible from ta0es (the part so recovered can be considered as belonging to the p!blic transfer) or matched b& p!blic s!bsidies. %a0es foraid can be singled o!t or p!blic aid can be financed o!t of general ta0ation. All these iss!esare the ob:ect of specific anal&ses.

3% Reciprocities21 And, for a f!ll presentation, Golm 244/.

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.1 !n overvie"

A gift or favo!r motivated b& another gift, for instance the ret!rn gift of an initial gift,constit!tes the ver& important social relation ofreciprocity . %his is ver& different from a self

interested e0change where each transfer (or favo!r) is provided !nder the condition that theother is provided, and hence is not a gift (in the proper sense of the term).


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the& give to their aging parents given that their parents have given to them and to their own parents, and their children will give to them. %his b!ilds intergenerational reciprocities whichare direct, or generali ed and reverse chain reciprocities. ther intergenerational chainreciprocities are fo!nd in the general acceptance, in man& societies, of pa& as &o! go pensions&stems (the &o!ng, who will be financed b& the &o!nger, finance the old who have financed

the older), and of the p!blic f!nding of ed!cation (ta0pa&ers, whose ed!cation has beenfinanced b& the older, finance that of the &o!ng who will finance that of the &o!nger) B in both cases, there :ointl& is a generali ed and a reverse reciprocit& (and there can also be adirect reciprocit& of pension for ed!cation).

%he presence of reciprocit& constit!tes both a motivational and relational fail!re# ofs&stems of mar"et and of command solel& based on self interest, and the most common ca!seof spontaneo!s remed& to the other fail!res# of these s&stems d!e to diffic!lties ininformation, comm!nication, or coercion of all t&pes, as we will see.


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p!blic services. %he& s!pport politicians and vote for large ta0es. -tatesmen are s!pposed toact for the good of the people whose reciprocal s!pport rests on li"ing and gratit!de. Eet, thisis a smaller part of the stor& for political men of lower ambition.

.2 #$%man roc&s on "hich societies are b%ilt.'

%he fact, the importance, the nat!re, and the vario!s t&pes of reciprocit& co!ld not haveescaped Adam -mith3

Of all the persons, however, whom nature points out for our peculiar eneficence, thereare none to whom it seems more properly !irecte! than to those whose eneficence wehave ourselves alrea!y e#perience!. 2ature, which forme! men for that mutual kin!ness,

so necessary for their happiness, ren!ers every man the peculiar o (ect of kin!ness, tothe persons to whom he himself has een kin!. Thou"h their "ratitu!e shoul! not alwayscorrespon! to his eneficence, yet the sense of his merit, the sympathetic "ratitu!e of theimpartial spectator, will always correspon! to it. #

(The Theory of &oral Sentiments , art , -ection 2, Chapter 1).

%his giving to someone beca!se she has given to &o! was labelled reciprocit& in-mith;s time (b& orell&,1 //).2$ %his pervasive social cond!ct2* was claimed to be one ofthe h!man roc"s on which societies are b!ilt# b& arcel a!ss in his highl& infl!ential Essayon the Gift of 1'2*, and it has been since then a central e0planator& concept of the socialscience.2/ %his pair of favo!rs both wa&s thoro!ghl& differs from an e0change in the strict and proper sense B for instance a mar"et e0change B beca!se the two transfers are gifts, the& aregiven, hence, b& definition, each res!lts from an act that is free in isolation, whereas thetransfers of an e0change are m!t!all& conditional, that is, each has to be performed b&e0ternal obligation (or promise "eeping) when the other is performed.26

-mith sees several motives as e0plaining reciprocit&. %angible reciprocit& is ofbeneficence,# b!t it rests on a reciprocit& of "indness. %his refers to both the action and thesentiment that motivates it. %he reciprocit& in sentiment can be described as li"e peoplewho li"e me.# -mith also notes both the gratit!de of the beneficiar& of the gift or "indnesstowards the first giver, and the merit of the latter. e also mentions the s&mpathetic gratit!deof the impartial spectator # the reference to the impartial spectator# s!ggests a reason offairness.

%his incl!des most of the motives for gen!ine reciprocit&. %he& fall into twocategories. As we have seen, inlikin" reciprocity the ret!rn gift is motivated b& li"ing theinitial giver beca!se she provided a benevolent gift, andSor beca!se she li"es the initial

2$ -mith also occasionall& !sed the term reciprocit&. owever, whether he !ses it in this sense or onl&for describing self centered e0change is a classical debate in smitholog (see, e.g., @anner, 1' $).?ater proper !ses incl!de ro!dhon ( 5e manuel !u sp6culateur + la ourse , 18/$S18/ ) and theanthropologist st!dent of Garl enger %h!rnwald (e.g., 4ie Gemein!e !er 3anaro , 1'2*).2* Cond!ct is behavio!r pl!s its motives.2/ -ee Golm, 1'8*a.26 Altho!gh the definition of reciprocit& in the social science is !nambig!o!s, some other disco!rses

have !sed this vocab!lar& in all directions. -ome have seen e0change in the strict sense (as withmar"et e0change) as a t&pe of reciprocit&, while others have called reciprocit& a t&pe of e0change. %he basic iss!e is that disting!ishing the motivations is essential.

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receiver. %he latter reason isreciprocal likin" , a reciprocit& in sentiment based on affectionaltr!ism. -mith emphasi es that reciprocal li"ing is partic!larl& appreciated beca!se nothin"

pleases us more than to o serve in other men a fellow'feelin" with all the emotions of ourown reast .#2 %he initial gift can have the role of revealing the li"ing or of proving itsintensit& (even if the initial giver gives in order to be li"ed as a res!lt of her gift or of her

li"ing, her gift reveals how m!ch she wants to be li"ed, andipso facto how m!ch she li"es, beca!se &o! want more to be li"ed b& someone the more &o! li"e her).28

%he second t&pe of gen!ine reciprocit& isalance reciprocity where the motive of theret!rn gift is to maintain some social balance with the initial gift, sometimes for a reason offairness. %his motive often incl!des a desire to avoid moral indebtedness. %he desire of balance or the preference for it is 7!ite primitive and basic, altho!gh people are more or lesssensitive to it, depending on personalit&, c!lt!re, ed!cation, and social setting. t is to becompared with revenge and the desire for it, its co!nterpart in cond!cts of negativereciprocation. %he :!dgment of other people sometimes matter, b!t not alwa&s and notnecessaril&. %he motive has an aspect of a norm for reciprocating or for avoiding moralindebtedness. t then belongs to normative altr!ism.2' %his also incl!des the desire of fairnesswhen it is present. %his norm can have dimensions of inner demand or obligation, of anonmoral social norm, and more or less of a moral norm.$4 %he social aspect is related to the :!dgment of other people, b!t this :!dgment can be imagined or become internali ed.

+ratit!de towards the giver both elicits or favo!rs li"ing her, and favo!rs providing aret!rn gift with a sense of balance.

%he giver;s merit, for her vol!ntar& sacrifice on behalf of the receiver, is a reason for providing her with a corresponding reward. owever, this rem!neration can be provided b&the initial receiver or b& someone else (incl!ding an instit!tion). ndeed, Adam -mithcontin!es with3 2o enevolent man ever lost alto"ether the fruits of his enevolence. If he!oes not always "ather them from the persons from whom he ou"ht to have "athere! them,he sel!om fails to "ather them from other people .# e even specifies, 7!ite optimisticall&,an! with a tenfol! increase ,# before concl!ding generall& that 7in!ness is the parent ofkin!ness% an! if to e elove! y our rethern e the "reat o (ect of our am ition, the surestway of o tainin" it is, y our con!uct to show that we really love them .#

%his giving to a giver b& agents who are not beneficiaries of the initial gift B thereverse reciprocit of the modern theor& of reciprocit& B had been emphasi ed, in almostthe same terms, b& the philosopher


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Eet, among e0tended reciprocities,# this reverse reciprocit& is probabl& lessimportant than the opposite generali ed reciprocit b& which someone who has been helpedtends to help others, even those who have not helped her in the first place. %his is the helping behavio!r# of social ps&cholog&, one of the most st!died and doc!mented of h!man cond!cts(these st!dies were especiall& motivated b& the intense debate following a m!ch p!blici ed

crime where none of the n!mero!s onloo"ers intervened or called for help).$2

An individ!al also sometimes gives or helps in ret!rn to his receiving a gift or help, inorder to be given to or helped again, b& the initial giver or b& another agent, who then wo!ld be motivated, at least in part, b& the hope to receive again a f!rther ret!rn gift or help. %hisleads to a rec!rrent se7!ence of gifts or helpings both wa&s, which occ!r b& themselves or inanswer to the occ!rrence of some specific need of the receiver or means of the giver. %hemotivations can be p!rel& self interested or at least partiall& so. hen the& are p!rel& selfinterested, the relation is b!t a se$uential e#chan"e , where each gives in order that these7!ence contin!es. %his relation, however, is better classified as an e0change than as areciprocit&, as far as the cr!cial iss!e of motivation is concerned.

.( )he special games of reciprocit*

Consider two individ!alsi and ( engaged in a simple reciprocit& where the& respectivel& give " i( and " (i to the other, where these two items denote vectors of 7!antities of goods or services.

ndivid!ali;s !tilit& f!nction is

u iJ ui( 1 i B " i(N " (i, " i(, " (i, 1 (N " i( B " (i),where 1 i and 1 ( denote respectivel& individ!als;i and ( initial endowments of goods orservices (the& are vectors of their 7!antities). %he first arg!ment manifests individ!ali;s selfinterest. %he last arg!ment can describe individ!ali;s altr!ism towards individ!al ( B thenui increases with the 7!antities of goods in this vector B, b!t it ma& also not e0ist (or again it cans!pport descriptions of individ!ali;s env&, sense of inferiorit& or s!periorit&, desire ofdistinction or of conformit&, and so on). %he pair of central arg!ments, " i( and " (i, can describe preferences abo!t the comparison of both gifts for reasons of balance, fairness, gratit!de,resentment (if the gift received is lower than e0pected), comparative stat!s, or competitivegiving. %he presence of the second arg!ment " i( in itself can represent individ!ali;s d!t& orstat!s see"ing. owever, if the reason for the d!t& or for the stat!s are morals or virt!e, itsho!ld in fact refer to the receiver;s benefit, hence to the last arg!ment 1 (N " i( B " (i. hen " (i isgiven, the f!nction " i(( " (i) denotes the (a) " i( that ma0imi esui. -imilar concepts are definedfor individ!al (.

f individ!ali is the first to give, she (more or less) foresees individ!al (;s ret!rn gift " (i( " i(). f she does not 7!estion this order of the givings, she chooses the (a) gift " i( thatma0imi esui with " (iJ " (i( " i(). -he is a -tac"elberg leader# in the reciprocit& game. -he can besaid to e0ploit# the reciprocal reaction of the other person. n so doing, she is p!rel& selfinterested ifu i depends onl& on its first arg!ment,u iJ uiP 1 i B " i(N " (i ( " i()Q. I!t she is not in theother cases (in partic!lar, she can be also altr!istic). %his is a!omination reciprocity .

owever, reciprocit& has a flavo!r of egalitarianism in actions towards the other. 5ow, there being a first and a second pla&er is a strong ine7!alit&, if the& act as describedabove. f the actors e0tend their reciprocitarian sentiments to the orders of the moves in time,

the& see" a sol!tion that does not depend on this iss!e, that is, on who is first or second to$2 %he Gitt& +enovese case, 1'6*.

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give or even whether the& give sim!ltaneo!sl&. %hen, a first giver chooses a gift that co!ld beher ret!rn gift if she were the ret!rn giver receiving the act!al ret!rn gift as initial gift.

ence, the chosen gifts satisf& the two relations " i(J " i(( " (i) and " (iJ " (i( " i(). %he sol!tion has the form of a Co!rnot 5ash sol!tion, b!t it has a f!ll and rational e0planation which is lac"ing inother cases of one or two shot games. t is a moral Co!rnot 5ash sol!tion reali ing the

ordering e7!it relative to the order of the moves. %he res!lt is ane$uili rium reciprocity .%he classicall& "nown str!ct!res of these two sol!tions show that it seems that other

pairs of gifts can ma"e both individ!als better off3 the& seem not to be areto efficient (theindivid!als; indifference loci are not tangent to each other). owever, the individ!als have tochoose these other pairs of gifts. For instance, the& wo!ld ma"e an agreement in this respect.

r, alternativel&, an e0ternal benevolent power wo!ld impose the sol!tion on them. n bothcases, however, the transfers wo!ld no longer be gifts in the proper sense of the term. n thecase of an agreement, the transfers wo!ld be parts of an e0change, since the& wo!ld bem!t!all& conditional on each other b& e0ternal obligation or promise "eeping once theagreement is accepted. n the other process, the transfers wo!ld be imposed on the agents. n both cases, the related attit!des, meanings, and hence motives, wo!ld be different. ence, the preferences abo!t these transfers, and the str!ct!re of the !tilit& f!nctions, wo!ld a priori bedifferent. %he choice of the agreement or of the imposed transfers wo!ld have to be madewith these new preferences. And the individ!als ma& not end !p happier or more satisfied inthe end, even if one can ma"e s!ch comparisons when preferences change. n partic!lar, the&ma& lose intrinsic 7!alities of the relationship of reciprocit& which the& ma& appreciate, s!chas m!t!al "indness, consideration or respect fellow feeling and not being considered onl& asa means b!t also B at least in part B as an end (good reciprocit& B there are others B ise0change that places the partner in the "ingdom of ends#).$$

4% Importance and scope of giving, altruism, and pro5social conducts

+.1 Overvie"

Altr!ism, giving, and reciprocit& have an overwhelming importance in societ&, its econom&,and the allocation of reso!rces. %he& permit their e0istence, performance, and 7!alit& invario!s wa&s. 5ot onl& do the& r!le the life and the econom& of families and the sector ofcharit&, and capital acc!m!lation thro!gh gifts to children, b!t the& are a main factor of political life and of the role of the p!blic sector and p!blic finance thro!gh the effects ofconceptions of :!stice and of the common good in addition to :oint giving the& permit thever& e0istence of a free and peacef!l societ& and of a free mar"et thro!gh the respect of others

and of their rights and propert& the& !nderlie most of the spontaneo!s and decentrali edcorrections of the vario!s shortcomings and fail!res# of the mar"et and of organi ations(incl!ding firms) the& therefore are an essential factor of economic efficienc&, prod!ctivit&and growth thro!gh vario!s wa&s the& have an important role in labo!r relations and at thewor"place the& are a basic ob:ective of man& cooperatives, associations, and cl!bs the& arecr!cial in general sociabilit& and hence for the essential amenit& of life in societ& the&constit!te a most basic social bond and the& are the most !niversal criterion for :!dging theintrinsic 7!alit& of social relations and of individ!als.

$$ A good deal of what goes on in the process of so called development# consists of replacing

relations of reciprocit& b& mar"et e0changes, th!s changing the societ& and, in the end, the personalit&of people, in a wa& that the& generall& cannot forsee or even conceive at the onset of thetransformation.

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+.2 Families

%he allocation of reso!rces sho!ld first have people to whom to allocate and persons also provide the main economic reso!rce, the stoc" of h!man capacities. ence, there sho!ld first be procreation, which !s!all& res!lt from love, a partic!larl& strong t&pe of altr!istic

sentiment and of li"ing reciprocit&.$*

oreover, no societ& can s!rvive witho!t someonefeeding children and ta"ing care of them B gifts which again essentiall& res!lt from love (anda little from d!t&). %he first social relations and sentiments a h!man being is aware of ande0periences, and the onl& ones for several &ears, are "inds of ver& strong, warm andreciprocal altr!ism. %he first social relations and sentiments man"ind has observed ande0perienced, in the famil&, the e0tended famil&, and small gro!ps, are mostl& giving, strongaltr!ism, and reciprocities.

oreover, people tend to mate with altr!ists, notabl& beca!se the& are li"eable and prone to protect them and their common offspring, which favo!rs the spread of geneticconfig!rations favo!rable both to altr!ism and to being attracted b& altr!ists (and hence againto the reprod!ction of altr!ists).$/ %his selection of the altr!istic gene# is complemented b&the selfish gene# which ma"es &o! help people whomi"ht be genetic relatives, and possibl& b& the selection of cooperative societies among competing gro!ps as conceived b& @arwinand Gropot"in.

5owada&s, more than one half of the American pop!lation depend for their sec!rit&and material satisfactions not !pon the sale of their services b!t rather !pon their relationshipsto others# (9dm!nd helps, 1' /).

oreover, we have noted the impressive fact that gifts to children thro!gh be7!estsand ed!cation prod!ce abo!t 84M of savings and capital acc!m!lation, and hence ofinvestment, technical progress, and per capita economic growth B the rest of growth being d!eto loving procreation B (Gotli"off and -!mmers, 1'81, +ale and -cholt , 1''*).

9ven economists who scorn altr!ism and cherish the selfishhomo economicus live infamilies where the& themselves probabl& love and give. %he& can hardl& fail to notice the presence of altr!istic sentiments and behavio!r there B or so it seems. ndeed, a n!mber ofeconomists have emphasi ed for long the contrast between the motives in the mar"et and inthe famil&. %his was implied b& ic"steed;s notion ofnon'tuism , shortl& disc!ssed, or in o!rda&s b& Iec"er;s altr!ism in the famil&, egoism o!tside of the famil&.# Iec"er (1' *) seesindeed the famil& as dominated b& an altr!istic distrib!ting pater familias . Eet, a n!mber of

other economists, on the contrar&, p!sh the consistenc& to the point of seeing even the famil&as a self interested e0change, and this model was theoreticall& developed (Chiappori;s initialwor"). %his ac"nowledges the effects of interactions and the m!ltipolarit& of a famil&, b!twith a s!rprising view of motivations. %hen, a new new economics of the famil& reconciledinteractive m!ltipolarit& with giving and positive affects in basing a theor& of the famil& onreciprocit& (Arrondel and asson).$6 n fact, families displa& all forms of relations B giving,e0change, and constraint B, b!t are better seen as a networ" of reciprocities where relations ofother t&pes are in fact moments in this broader framewor".

$* Adam -mith, a life long bachelor, finds this passion b& which nat!re !nites the two se0es# to bealwa&s, in some meas!re, ridic!lo!s# and holds that this passion appears to ever& bod&, b!t the man

who feels it, entirel& disproportionate to the val!e of its ob:ect# (The Theory of &oral Sentiments , $').$/ -ee -ection 12.$6 -ee their chapter in this vol!me.

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%he famil& manifests in partic!lar all si0 t&pes of direct and chain intergenerationalreciprocities, since one gives to one;s children and to one;s aging parents, given that one;schildren will give to oneself and to their children, and one;s parents have given to oneself andto their parents.

owever, giving to children is more important than s!pporting one;s parents infamilies in developed economies. ndeed, people not onl& save for their retirement b!t, inaddition, give m!ch to their children in the form of raising, ed!cation, gifts and be7!ests. %hisvol!ntar& transmission in fact acco!nts for most of savings and hence of capital formationnowada&s (in co!ntries with pa& as &o!r go pension s&stems, this collective scheme ma"esthe &o!ng finance the retirees and saving for one;s retirement is still lower).

+.( )he political and

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