Altruistic Capital and Our Power to Do Good
A ‘do-gooder’ and optimist at heart, Nava Ashraf knows that humans are intrinsically motivated by serving one another, and her research seeks to prove it. A Canadian economist, researcher, and professor, Ashraf has spent almost two decades travelling the world, studying what incentives people to do their best at their work. Her research has opposed humanity’s black-and-white thinking about selfish people and altruistic people. Instead, she has proposed that all workers are motivated both by money and impact. Ashraf’s life has been dedicated to harnessing both financial and social incentives to discover ways that workplaces can motivate their employees.
On their shoulders
For millennia, great thinkers and scholars have been working to understand the quirks of the human mind. Today, we’re privileged to put their insights to work, helping organizations to reduce bias and create better outcomes.
Altruistic capital—the investment in altruistic acts which subsequently have returns for us.
If you’ve been reading The Decision Lab’s content for a while, you know that economic theories often fail to take into account aspects of human behavior. We use the term homo economicus to distinguish a fictional being who is completely rational and economically self-interested from a real person: one with beliefs, values, and interests outside of financial gains.
Professors Nava Ashraf and Oriana Bandiera’s research takes into account one key difference between homo economicus and the real human: the desire to do good for others. Their research cites Adam Smith’s The Theory of Moral Sentiments: “How selfish soever man 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.”
“I grew up very aware of this broader world in which, with the flip of a coin, I could have been raised under a chador, not able to have an education, not able to actually do any of the things that I’ve been able to do in my life. And so I really wanted to figure out how to bring these opportunities to others.”
While homo economicus works only to make money, the average real person today seeks meaning and fulfilment in their work, which is often garnered by doing something useful for somebody else, or for society at large. According to Ashraf, each person lives with a certain amount of altruistic capital: a level of desire to do good for the world.
While certain people or professions may be characterized by society as altruistic or self-interested—consider the difference between a wealth management advisor and a kindergarten teacher—Ashraf’s research disputes this sort of black-and-white thinking. Rather, according to Ashraf, all people, in all professions, are motivated, to some degree, by the social impacts of their work; it’s a matter of harnessing these rewards to motivate people in the workplace.
The idea of altruistic capital has implications for how we go about choosing meaningful careers, but also for how we design work environments. While workplaces typically incentivize employees to do their best using financial capital—in the form of commission—they should also draw on altruistic capital as another form of motivation. If employees can get a closer look into how the work they are doing benefits the population at large, they are much more likely to be motivated toward and succeed at what they do.
“Altruistic capital is the idea that every individual has within them an intrinsic desire to serve. In an organization, all the employees already have some of this, in varying degrees.”
A great example of Ashraf’s research in practice took place at a hairdressing salon in Zambia. There, she and her colleagues tasked hairdressers with educating their clients about HIV/AIDS and giving out female condoms while doing their hair. For two groups, they gave different levels of financial incentive (a 10% vs 90% return). For the third group, they provided no financial gains; rather, they left a visual depiction, made out of stickers, next to their workplace, tallying how many women the hairdressers had educated and provided with contraception.
Disputing the idea that people are motivated only by financial gains, the group of hairstylists with zero financial incentive provided more education and contraception to customers than the groups financially compensated for their efforts. Apparently, being able to wake up every morning and see an actual representation of the impact they had motivated these hairstylists to keep doing good work. In Ashraf’s terms, drawing on these women’s altruistic capital was a great motivator, and even incentivized them to keep acting more altruistically over time.
That is the cornerstone of altruistic capital: doing altruistic acts make them easier, more fulfilling, and more frequent over time.
“As a manager, how you organize the work, and how you incentivize, can increase or deplete the amount of altruistic capital.”
This philosophy can do great things in the workplace. If you find yourself in a career that is not inherently meaningful, there are ways to increase your fulfilment without switching tracks entirely. Every profession serves the world in some capacity, and it’s up to your workplace to make the fruits of your labour more accessible to you and your colleagues. If you are in a position that allows you to influence the culture of your company or field, you can instil fulfilment and meaning in the lives of your employees, by ensuring that prosocial behaviors become a regular practice and that your company’s impact is seen and communicated to your staff.
If you can bring your company closer to its true purpose and execution, it is almost guaranteed that your employees will be incentivized to do better work.
You can, it appears, become more altruistic with practice.
“Imagine going to work where you feel a great sense of meaning, where you feel supported by others, where you feel a locus of control. That improves mental health, and that improves productivity. So it’s a virtuous cycle.”
Nava Ashraf was born in Iran. When she was just three, her family fled due to the religious persecution posed by the 1979 Iranian Revolution. They came to Canada.
Ashraf got her B.A. in Economics from Stanford University, followed by an M.A. and Ph.D. in Economics from Harvard University.
She immediately started working at Harvard Business School as a professor in the Negotiation, Organizations and Markets Unit, where she stayed for 11 years. Since then, she has worked as a professor at the London School of Economics (LSE).
Ashraf is also recognized for her role as director of the Marshall Institute for Philanthropy and Social Entrepreneurship, an affiliate of LSE that serves to empower organizations who work toward causes for the public good.
Ashraf is best known for her work in the fields of development economics, behavioral economics, and family economics. She conducts her research out in the field of diverse world economies, seeking to discover how to increase incentives, motivation, and gender equality in workplaces around the world.
Ashraf has stated that fleeing Iran during the 1979 Revolution inspired her to work with a global perspective in mind. Knowing that had she stayed in Iran, she would not have been granted the opportunities she’s been blessed with today has motivated her to find ways to bring these opportunities to others.
Ashraf is known for her theory of altruistic capital, as well as her broader research on incentivization and motivation in both the public and private sectors. She recognizes our conception that private-sector workers are motivated by financial incentives, whereas public sector workers work from a place of altruistic incentive and she works to dismantle this binary. Her research is grounded in the belief that all humans, to varying degrees, are motivated both by altruistic and financial capital and that drawing extensively on both these forms of motivation can increase productivity in both public and private sectors.
“The more that we engage in altruistic acts, the easier they may be in the future.”
Much of her work also seeks to answer the question of how we can find the right people—people who really care about what they do—to fill productivity gaps in public sector work.
Ashraf developed these ideas through her research at both Harvard and LSE. She was heavily influenced by a summer internship at the World Bank. While conducting research as an intern on Moroccan agricultural policy, Ashraf realized that there were major outlook differences between the people making the decisions and the people for whom these decisions would actually have an impact.
Inspired by the idea of actually meeting and interacting with the Moroccan farmers whom this policy attempted to benefit, Ashraf realized her desire to study the human elements of economics. She now researches to discover how we can fill those gaps in decision-making and form solutions that not only sound great in theory but actually work in the communities they attempt to serve.
Ashraf’s work has largely been conducted with Italian economist and fellow LSE professor Oriana Bandiera, as well as American economist and professor at Northwestern University, Dean Karlan, among others.
The implications of Ashraf’s work are huge in terms of our global economy since she seeks to understand how humans can be motivated to reach their full potential. Moreover, Ashraf’s work demonstrates to us that all people can actually be excited about work, not only for their own financial benefit but because they are actually all giving back to society in some way. In turn, this collective ‘altruistic capital,’ or the capitalization on the incentive to do good, can have huge implications for our world productivity, and therefore, our financial output.
Books, articles, and lectures
LSE video on altruistic capital: This is a tell-all video explaining the roots and effects of Ashraf’s research on altruistic capital.
International Growth Centre lecture: In this talk, Ashraf describes extensive research on how to motivate public sector workers.
Motivating public sector workers: In this short video, Ashraf compares different ways that economies around the world financially incentivize their public sector workers, and ways that research is heading in terms of best practices.
VoxDev podcast: On this podcast episode, Ashraf discusses how unequal gender norms and weak rule of law dissuade females in developing countries from risking entrepreneurship. With Alexia Delfino and Edward L. Glaeser, she discusses how women seek to work with other women, keeping them in a cycle of working in less profitable industries.
BMO Public Lecture, “Human Nature and Human Development”: In this lecture, Ashraf discusses her research on altruistic capital.
Altruistic capital: This is Ashraf’s formal published research on altruistic capital.
Zambia study: This article succinctly explains Ashraf’s study on hairstylists in Zambia.
Other research: A comprehensive list of Ashraf’s research papers, with links.
- Ashraf, N. (2020, October 28). Gender norms, rule of law, and female entrepreneurship in developing countries. VoxDev. https://voxdev.org/topic/institutions-political-economy/gender-norms-rule-law-and-female-entrepreneurship-developing-countries
- Ashraf, N. (2016, June 21). Motivating Public Sector Workers. YouTube. https://www.youtube.com/watch?v=g2AukoKPWxg&ab_channel=InternationalGrowthCentre
- London School of Economics and Political Science. (2020). Altruistic capital. https://www.lse.ac.uk/marshall-institute/research/projects/altruistic-capital
- London School of Economics. (2017, October 2). LSE Research | Nava Ashraf on Altruistic Capital. YouTube. https://www.youtube.com/watch?v=mMMXytB3euk&ab_channel=LSE
- Nava Ashraf. (2018, February 5). Wikipedia, the free encyclopedia. Retrieved December 19, 2020, from https://en.wikipedia.org/wiki/Nava_Ashraf
- Nobel, C. (2013, January 21). Altruistic capital: Harnessing your employees’ intrinsic goodwill. HBS Working Knowledge. https://hbswk.hbs.edu/item/altruistic-capital-harnessing-your-employees-intrinsic-goodwill