Charity, Parochialism, and the Inefficiencies of Altruism

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Whilst there has been an increasing amount of research focusing on altruism and the science of giving, the issue of why we specifically donate our money to the places that we do, and where it ends up, has been neglected. Fortunately, some of these issues can be addressed using simple behavioural science theories.

Most of us are good and charitable people. Whether it is pure altruism, the good feeling we get, or just a matter of doing it because others do, many of us have a desire to give to charity in some form or another (Brooks, 2007). Last year in the United Kingdom for example, people donated around £9.7 billion to charity (CAF, 2017), with medical research being the most popular cause with 26% of total donations, and overseas aid and disaster relief getting 19%.

However, is this money going to the right places? Whilst there has been an increasing amount of research and attention given to the behavioural science of giving (BIT, 2013), the issue of why we specifically donate our money to the places that we do, and where it ends up, has been neglected. Fortunately, some of these issues can be addressed using simple theories from the field of behavioural science.

Why do people give to already well-funded charities?

One of the questions left unanswered by research into the science of giving, is why people feel compelled to give money to charities that are already very highly funded by public donations. An example of this is Cancer Research UK. This organisation received £442 million from private donations alone (£544 million if you include trading income) in 12 months between 2016 and 2017 (Cancer Research UK, 2017).

In the case of this particular charity, one important reason for people’s persistent donations can be put down to the fact that it is advertised well, and subsequently occupies a salient position in the public eye. As they are exposed to advertising, people become familiar with Cancer Research UK, resulting in an association between them and charity in general.

Hence, when you are thinking about where to donate your money, Cancer Research UK is one of the first places you think of. This idea primarily comes from the research of Robert Zajonc (1968), who argued that simply being repeatedly exposed to something makes you think of it more frequently and positively, potentially explaining how Cancer Research UK’s position in the public is related to its persistent rate of donations.

However, arguably the main reason behind people’s donation to this particular charity is because a lot of people know someone who has or had cancer, making it a very personal, relatable and familiar issue. We may be more inclined to give to a charity that helps people nearest to us rather than in distant and unidentifiable places. This is known as parochialism (Baron & Szymanska, 2011), where our close proximity to a charity’s focus leads us to care more about it and those who it concerns.

Meanwhile, we don’t tend to feel as much for those suffering far away or in another country because we don’t get as much real exposure to it, and can therefore distance ourselves from it. So given two individuals in equal and deserving need of help, we have a preference to help those at home first. However, this isn’t always the case, which leads me on to the next question.

Why do people donate to disasters that are broadcast on the news?

Considering Baron and Szymanska’s principle of parochialism, we should expect to see considerably less charitable giving and public concern toward issues that are far away from us, such as foreign conflicts and natural disasters in distant nations. However, sometimes we see the opposite.

Take the ongoing humanitarian crisis in Syria for instance. Contrary to the theories stating societies’ parochial interests toward issues that are closest to them, there has at times been a huge amount of concern and altruistic behaviour towards events taking place extremely far away. Why is this?

Recent behavioural science theories have also put this to the role of the media. When a recent disaster has been in the news, we can identify with that particular event because modern technology allows us to visualise it, and see exactly what our money would go towards helping if we decided to donate to it. The identifiable victim effect (Small & Lowenstein, 2003) for instance causes us to empathise with those affected in reaction to emotional and heart-wrenching stories.

This may also account for the selective variance in which distant issues receive charitable focus or not. Disasters which are framed in the public eye by just using numbers and statistics on their own often fail to provoke such an emotional response, due to the fact that they are not as relatable as the vivid scenes depicted in media campaigns, and easy to ignore as a result.

However, this may not make sense. Why should we be less interested in helping any victim and so much more keen to help the specified victim we can visualise and relate to? Either way, people are suffering and we can help them. But the one in the news will likely get more donations. This is an ‘irrational’ way to think, as behavioural scientists would put it; it involves us making decisions emotionally using our hearts rather than our heads, which brings me to the final question.

Why do people give a small amount to several charities rather than one big amount to one single charity?

People give in all sorts of different ways. Some people give frequently to the same charity, some give large one-off donations, and some give on an ad-hoc basis to multiple charities. But what is the reasoning behind donating little and often? The reason some individuals do this is because of the ‘warm glow’ they get as a result of helping lots of different charities (Andreoni, 1990).

Think of it like the following choice. You could get a single good feeling from making one big donation, and it’s a fairly good feeling because it’s a large amount. Or you can get multiple good feelings from every time you donate a little bit to a different charity. Which would you prefer? Though it is very hard to get hard evidence for this, the literature suggests it is mostly the initial choice (Rotemberg, 2014). 

We maximise our “warm glow” feeling by giving little and often, since there is declining marginal utility from giving. This means that we get more of a “warm glow” by giving one pound to two different charities than by donating the entire two pounds to one single charity (providing we have no irrational emotional attachments).

In other words, the difference in “warm glow” between donating either nothing and donating one pound is much greater than the difference between donating one pound and two pounds. According to Baron & Szymanska (2011), we can avoid these biases. To be purely efficient in our altruism, we should identify a charity that does the most ‘good’ per pound and make our entire contribution to that one charity.

Efficiency?

But what counts as efficient in this context? We could say your donation is efficient when your extra pound goes somewhere where the most ‘good’ is done. An economist would define this as the Marginal Benefit (MB), concerning the direct impact your extra £1 donation has on helping people.

A popular and very well-funded charity such as Cancer Research UK for instance has a low MB, because donating one extra pound to them will make very little difference, as they already have millions of pounds being pumped into their search for a cure, so your extra few pounds isn’t going to save any lives. Whereas, if your extra pound was given somewhere that helped prevent the spread of malaria in Africa, that pound might purchase a malaria net which would directly save lives – meaning that the MB is much larger in such charities.

So if we gave all of our money to the charity with the highest MB, we would be helping the most people, whilst doing the most ‘good’, and therefore be the most efficient.Of course there are issues with this way of thinking.

Firstly, what do we define as ‘good?’ Even though your donation to Cancer UK might not directly help anyone in the short term, it is funding research that one day may help millions. So in some people’s eyes, that is just as ‘good.’ Also, if everyone gave to the same charity with the highest MB, this would instantly lower that MB. It would also leave many other charities without any donations at all.

Similarly, how can you morally compare dying from a preventable disease in a less developed country with dying from a less understood disease in a more developed country? This is where the distinction between efficiency and morality becomes blurred. However, this draws us into unchartered territory, away from the premise of this article. Before we can debate which charities do the most ‘good’ and what the optimal allocation of existing donations would be, we first need to decipher exactly why people give to charities in the way that they do.

Conclusion

The purpose of this article is not to tell people where to give their money, whether that is to Cancer Research UK or not. Similarly, it is not advising against donating to the latest tragic cause displayed on TV. Its purpose is merely to highlight the biases we fall victim to. It has been revealed that a lot of people donate to certain very well-funded charities due to parochialism; the idea that we care more about issues that are close to us (both physically and emotionally).

Furthermore, people tend to donate more when they can visualise a specific victim rather than view them as part of an unidentifiable statistic. Individuals also prefer donating to several places rather than one single place because of the ‘warm glow’ they receive as a result. If we can realise theses biases are present, we can at least start to make conscious efforts towards making sure our money is helping the most people for our pound.

 

References 
Andreoni, James. “Impure altruism and donations to public goods: A theory of warm-glow giving.” The economic journal 100, no. 401 (1990): 464-477.
Baron, Jonathan, and Ewa Szymanska. “Heuristics and biases in charity.” The science of giving: Experimental approaches to the study of charity (2011): 215-235.
Team, Behavioural Insights. “Applying behavioural insights to charitable giving.” Cabinet Office (2013).
Brooks, Arthur C. “Does giving make us prosperous?.” Journal of Economics and Finance 31, no. 3 (2007): 403-411.
Cancer Research UK. “Annual Report and Accounts 2016/2017.” Cancer Research UK (2017). http://www.cancerresearchuk.org/sites/default/files/cruk_annual_report_2016-17.pdf
Charities Aid Foundation. “The CAF UK Giving Report 2017.” CAF UK Giving 2017. April 2017. https://www.cafonline.org/docs/default-source/about-us-publications/caf-uk-giving-web.pdf?sfvrsn=8
Rotemberg, Julio J. “Charitable giving when altruism and similarity are linked.” Journal of Public Economics 114 (2014): 36-49.
Small, Deborah A., and George Loewenstein. “Helping a victim or helping the victim: Altruism and identifiability.” Journal of Risk and uncertainty 26, no. 1 (2003): 5-16.
Zajonc, Robert B. “Attitudinal effects of mere exposure.” Journal of personality and social psychology 9, no. 2p2 (1968): 1.

William Phillips
About William Phillips:

Will completed his undergraduate degree in Mathematical Economics at the University of Birmingham, before moving on to Cambridge where he received his MPhil in Economics. It is here where he developed his interest in behavioural science, being able to discuss ideas with some of the leading thinkers in the academic world. He now works at a market intelligence and talent consultancy in London.