Altruism or diminishing marginal utility?

Gauriot, R; Heger, SA; Slonim, R

Altruism or diminishing marginal utility?

Gauriot, R Heger, SA Slonim, R

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Publisher:: Elsevier BV
Publication Type:: Journal Article
Citation:: Journal of Economic Behavior and Organization, 2020, 180, pp. 24-48
Issue Date:: 2020-12-01

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Field	Value	Language
dc.contributor.author	Gauriot, R
dc.contributor.author	Heger, SA
dc.contributor.author	Slonim, R
dc.date.accessioned	2022-10-30T20:23:11Z
dc.date.available	2022-10-30T20:23:11Z
dc.date.issued	2020-12-01
dc.identifier.citation	Journal of Economic Behavior and Organization, 2020, 180, pp. 24-48
dc.identifier.issn	0167-2681
dc.identifier.uri	http://hdl.handle.net/10453/162959
dc.description.abstract	We challenge a commonly used assumption in the literature on social preferences and show that this assumption leads to significantly biased estimates of the social preference parameter. Using Monte Carlo simulations, we demonstrate that the literature's common restrictions on the curvature of the decision-makers utility function can dramatically bias the altruism parameter. We show that this is particularly problematic when comparing altruism between groups with well-documented differences in risk aversion or diminishing marginal utility, i.e., men versus women, giving motivated by pure versus warm glow motives, and wealthy versus poor. We conclude by proposing two approaches to address this bias.
dc.language	en
dc.publisher	Elsevier BV
dc.relation	http://purl.org/au-research/grants/arc/DP150101307
dc.relation.ispartof	Journal of Economic Behavior and Organization
dc.relation.isbasedon	10.1016/j.jebo.2020.09.030
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1401 Economic Theory, 1402 Applied Economics, 1403 Econometrics
dc.subject.classification	Economics
dc.title	Altruism or diminishing marginal utility?
dc.type	Journal Article
utslib.citation.volume	180
utslib.for	1401 Economic Theory
utslib.for	1402 Applied Economics
utslib.for	1403 Econometrics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-10-30T20:23:06Z
pubs.publication-status	Published
pubs.volume	180

Abstract:

We challenge a commonly used assumption in the literature on social preferences and show that this assumption leads to significantly biased estimates of the social preference parameter. Using Monte Carlo simulations, we demonstrate that the literature's common restrictions on the curvature of the decision-makers utility function can dramatically bias the altruism parameter. We show that this is particularly problematic when comparing altruism between groups with well-documented differences in risk aversion or diminishing marginal utility, i.e., men versus women, giving motivated by pure versus warm glow motives, and wealthy versus poor. We conclude by proposing two approaches to address this bias.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/162959