Altruistic capital, what it is?
Is it a kind of new shares or commodities?. Even for Accounting and Economic
Student, The term of Altruistic Capital is something new and I believe this is
the case for most of us. in this article I try to explain the concept, the gap
within, and possible application in the public sector.
The fundamental Gap - Good vs
Bad
The first time I heard about altruistic
capital was from LSE public lecture series (click here) and it catches my
attention almost instantly. It can be
traced back from Professor Nava Ashraf paper on American Economic Review in 2017,
but its origins are much older, rooted from a branch of behavioral economics
and inspired by our well-known economist Adam Smith. Altruistic Capital is based on an assumption
that human is not necessarily self-centered and ‘good’ in nature as expressed
in His Books "The Theory of Moral Sentiments" that
“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.”
this assumption is contrary to
what we learn in the class that humans are self-centered and act rationally
according to their interests. so, with this new assumption lead to a new
paradigm to perceive the concept of capital namely "altruistic
capital". Altruistic capital is actually a character, its value is
measured by how the character created a social benefit (helping others, do
volunteer action, etc) and how it makes people (including him/herself) happy.
This value is accumulated (or build) by action "altruistic action",
the more 'good actions' done the more capital (feeling happy, building
character, and social benefit ) accumulated. so at this point, we make it clear
that the term of altruistic capital is a 'good character' and to increase its
value is by investing in forms of 'altruistic' action.
but is it the right assumption?
if we think about this concept more deeply, the two assumptions about human
nature are not exactly opposite, rather complementary. at first, we think that
there are two sides of human nature good vs bad. but it was incorrect, humans
act basically for their own interests, humans need to feel like 'a good person'
to be accepted by society because humans are a social creature and to fulfill
that we do an altruistic action. although it might vary for each person about
how much action needed to fulfill this 'psychological need'. my argument
actually in line with what Adam Smith statement that: "though he derives
nothing from it, except the pleasure of seeing it". it is then we embedded
a 'label' for our action as good or bad based on the impact or moral value. So
for me, it was improper to believe that this 'altruistic' concept is exclusive,
totally new, Adam Smith has taken back his word about human nature and then it
will 'correct' all of his economic foundations. altruistic is an extension of economic
studies that try to create a framework to comprehend the complexity and some
irrationality in human action and nature that is not captured in conventional
economic concepts.
The Return on Investment
As I mentioned before, humans act
for their own interest (return) and in the case of altruistic action, the
return is more likely in the form of 'happiness'. Is it? The fact is 'return'
that we will get from high altruistic capital also in form of monetary benefit
namely higher income. To think of it the same as investment in human capital
(in the form of education), investing in altruistic capital actually build our
character that would be fit or beneficial for others and the environment.
Nowadays, employees get promotions not only because of their hard skills
(investment in human capital) but also their soft skills (character,
leadership, etc) which is related to altruistic capital. Being a 'good' person
is beneficial in the workplace, for example, creating a comfortable working environment that leads to higher performance and lower employee turnover, it
could make you a respectable person thus gives you more chance to get a
promotion and or a raise. So, once again the altruistic concept is not
exclusive and could bring a non-monetary and monetary benefit (return) for
oneself.
The problem is, even if the
return is in the form of a monetary unit. It is hard to measure because of the
variability and uncertainty that follows. Again, as I said before this concept
is trying to comprehend the complexity of human action and nature thus it faces
a lot of difficulties to some extent. But I agree that we should concern about
altruistic capital for its possible benefit to our life.
A possible application in the
Public Sector
Talking about behavior and
contribution to society reminds me of taxes. if we think that paying taxes
as one form of altruistic action that could bring benefit to society then one
question arises “ what is the problem and how to make people realize and value
this action” is it because they are bad person who doesn’t want to
contribute? I don’t think so. This problem is not because of its lack of
benefit (because people get it from public facilities and services) but because
of its lack of impact on one personal happiness or self-fulfillment to do so.
As we know that public goods bring a ‘problem’ because of its non-excludability
and non-rivalry characteristics, everyone will get it whether they do an
altruistic action (paying taxes) or not. So, how to make people realize and
value paying taxes? The answer is the government must create a scheme that
makes a greater impact on oneself despite its well-known concept of indirect
benefit. The impact can be in form of the monetary or nonmonetary unit as I
explained before, for example, a household that already pays their property
taxes will get a sticker as a symbol of pride that shows they are a good
citizen. On the other side, the government could make a national campaign about
how important taxpayers to society. this could be self-fulfillment and pride
for those who pay their taxes.
