Nov 21, 2017
In episode 14, Rhod and Adam take a look at the field of
behavioural economics and how it affects philanthropy. Topics
- Classical Economics and charity: classical economics assumes we
are all rational and self-interested, so it cannot explain
behaviour that is apparently irrational and purely altruistic.
Hence new explanatory mechanisms have arisen- in particular the
“warm glow” theory which posits that all altruism is in fact
“impure” because donors actually get a benefit from their giving.
Subsequent neurological experiments have also backed this idea up.
So what does this mean for efforts to encourage philanthropy?
- Nudge, Nudge, Wink, Wink: Richard Thaler recently received the
Nobel Prize for Economics for his work on so-called “nudge theory”.
This proposes that small changes in the way information is
presented or choices offered can have a significant effect on
outcomes at a macro level. Can we harness this insight to drive
more charitable giving? What kind of nudges could we use?
- Fast & Slow Thinking: Another economist Daniel Kahneman, won
the Nobel Prize for his theory of “System 1 and System 2 thinking”
which distinguishes between the roles that deliberative (“slow”)
thought and less-deliberative thought based on heuristics (“fast
thought”) play in our decision making. What lessons could this
offer for philanthropy? Are there tensions between the desire to
make giving more strategic and evidence that appealing to “fast
thinking” may be more effective in eliciting donations?
Related Giving Thought material