Giving Thought

In episode 14, Rhod and Adam take a look at the field of behavioural economics and how it affects philanthropy. Topics covered include:   Classical Economics and charity: classical economics assumes we are all rational and self-interested, so it cannot explain behaviour that is apparently irrational and purely altruistic. Hence new explanatory mechanisms have arisen- in particular the “warm glow” theory which posits that all altruism is in fact “impure” because donors actually get a benefit from their giving. Subsequent neurological experiments have also backed this idea up. So what does this mean for efforts to encourage philanthropy?   Nudge, Nudge, Wink, Wink: Richard Thaler recently received the Nobel Prize for Economics for his work on so-called “nudge theory”. This proposes that small changes in the way information is presented or choices offered can have a significant effect on outcomes at a macro level. Can we harness this insight to drive more charitable giving? What kind of nudges could we use?