1. Altruistic actions

In economics, we deal in the transactions between people, and analyze whether or not the outcomes of those transactions are desirable. If we predict undesirable outcomes, we think of policies to incentivize people to act in ways that will lead to ideal transactional outcomes as much as possible.

In order to analyze the world through the lens of economics in this manner, we need to be able to predict people's actions. If we cannot predict people's actions, we cannot predict the outcomes of transactions. Predictions of actions in economics are based on the fundamental principle that people will act in ways that maximize their personal well-being. The way we think in economics is based on this universally agreed-upon assumption, as a method of studying the complex actions of people.

When thinking about people who act in ways that maximize their personal well-being only, you may imagine selfish people with no concern for others, but in reality, this is not the case. People in the real world act in ways that serve the interests of others as well. There is an old Japanese adage that says he who gives to another bestows on himself. This means that by helping others, positive results will come back to benefit you through a sequence of events. It does not even have to be through a sequence of events--if you act in the interest of others, very often, they will consider your well-being in return. Acting in the interest of others as a way of benefiting yourself can be considered a way of maximizing your personal well-being.

However, people also act in ways that ultimately do not benefit their personal well-being. Many people donate to causes without expecting anything in return. Satisfying one's heart in this manner can be considered a way of benefiting their personal well-being.

When discussing self-seeking behavior, economists often frame the concept in the context of altruism, but can people sustain this sense of altruism for extended periods of time, wherein individuals act in the interest of others?

2. An experiment of measuring altruism

I have been involved in researches related to altruistic actions in the past. As previously mentioned, in economics, we analyze market transactions. However, it is difficult to analyze the degree of peoples' altruism by observing market transaction data. This is because it is rare for us to be able to obtain market transaction data beyond simple numbers, such as the amounts being traded and how the volume of transactions change as prices and the economy fluctuate. In the field of natural science, we obtain data through experiments, and then analyze the data. In recent years, a similar approach has been used in economics. Some of these experiments are done on a large scale as social experiments, but what I am referring to here are experiments where test subjects actually conduct transactions in the lab. It may be more similar to psychological experiments in that sense. In the experiment we conducted, we gathered test subjects and had them conduct transactions while we observed them to see if people would choose to take altruistic actions.

Many numerous studies have already been conducted on altruism, so our research group planned our experiment to focus mainly on whether people can sustain their sense of altruism for extended periods of time. We began the experiment by pairing up the test subjects. The pairs were decided automatically by a computer, and the test subjects did not know who they were paired with. In other words, they were paired with strangers, and they were not told who they had been paired with. One of each pair was assigned the role of "dictator," while the other was assigned the role of "recipient." The dictator was given 800 yen, and told to share the 800 yen with their recipient. The aim was to measure the altruism of the dictators by seeing how much they would share with their recipients, who were complete strangers. In our experiment, we found that the dictators gave about 150 yen on average. Of course, some dictators shared none of the money, and kept all 800 yen for themselves. On the other hand, there were also dictators who acted with a sense of fairness, and gave 400 yen.

This was how we observed people's altruism towards complete strangers, but our focus was on whether this sense of altruism could be sustained for extended periods of time. To test this, our group conducted the same experiment two to three times. After the first time, we told all the dictators the average amount that had been given to the recipients. After showing them the level of altruism that the other dictators had displayed, we conducted the same experiment two more times. Furthermore, in the second and third tests, we put them in different pairs each time.

As a result of repeating the experiment after notifying the dictators of the average amount that had been given to the recipients the first time, the following results were observed. Many of the dictators who gave more than the average amount in the first experiment--those who were relatively more "altruistic"--reduced the amounts that they shared with the recipients in the second and third tests. Meanwhile, the dictators who gave less money than the average in the first experiment--those who were relatively less "altruistic"--did also change their amounts, but were on average less likely to significantly change the amount from the first experiment.

3. What the experiment result suggests

From the result of the experiment, we can surmise that the degree of consideration that people have for others is likely to change when they observe the behavior of the people around them. Of course, we cannot determine the cause based on the result of the experiment. The dictators who had given more money to their paired recipients might have thought that it would be a good idea to increase their personal well-being slightly or to take a bigger share of the benefits, when realizing what the others were doing.

I am writing this article at the beginning of 2021, when the second state of emergency was declared in major cities due to the COVID-19 crisis. Restaurants have been ordered to shorten their opening hours. There are still many unknown aspects of the COVID-19. Even if we accumulate all the knowledge within our reach, it may be difficult to completely prevent infections. We are encouraging people to take caution not to get infected, and at the same time, we are also emphasizing the fact that we should prevent ourselves from infecting others. The latter is the part that involves altruism. By looking at our experiment result, we can predict that the degree of altruism in our actions to prevent ourselves from infecting others may change after we observe the actions of others.

As I have stated in the beginning, we predict people's actions and form policies to help achieve the ideal results in economics. In order to incentivize people to continuously act in altruistic ways, we need to form policies that take into account the behavioral changes that we observed in our experiment result.

Akihiro Nakamura
Professor, Faculty of Economics, Chuo University
Area of Specialization: Public economics

Akihiro Nakamura was born in Aichi Prefecture in 1970.
He graduated from the Faculty of Business and Commerce, Keio University in 1994.
He completed his master's degree at the Department of Statistics in Yale University's Graduate School of Arts and Sciences in 2000.
He completed his doctoral course at the Graduate School of Business and Commerce (Doctor of Commercial Science) of Keio University in 2002.
After working at the Ministry of Internal Affairs and Communications, Tezukayama University, and Yokohama City University, he became a professor at the Faculty of Economics, Chuo University in April 2020.

His current fields of research include policies related to regulation and competition in the ICT and transportation fields, examining the market dominance of free-to-use services such as social media, and systematic design of new services such as ride-sharing services and autonomous driving.
His main published works include Tsushinjigyosha Sentaku no Keizai Bunseki (Economic Assessment of Telecommunications Carrier Selection) (Keiso Shobo, 2016).

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