A standard consequentialist model for welfare is that 1) each person cares about every person’s well-being at least a little, but cares about themself much more and 2) a dollar goes farther at purchasing increased well-being in the hands of a poor person than in the hands of a well-off person.
For example, say that each person values themself 100x as much as they value another person and a dollar goes 10x farther in the hands of a poor person than in the hands of a well-off person. From the point of view of a typical well-off person, me getting a dollar is worth 100 utils (let’s say, to set the scale), some other well-off person getting a dollar is worth 1 util (since I value them 1⁄100 as much), and some poor person getting a dollar is worth 10 utils (since I value them 1⁄100 as much and they get 10x as much well-being per dollar).
So one well-off person giving a dollar to a poor person is net negative according to the giver’s preferences: −100 utils from losing a dollar plus 10 utils from a poor person getting a dollar (-100 + 10 = −90). But if 100 well-off people coordinate to each give a dollar to a different poor person then that is net positive or according to the preferences of one of those well-off people: −100 from losing a dollar, minus 99 from 99 other well-off people each losing a dollar, plus 1000 from 100 poor people each getting a dollar (-100 − 99 + 1000 = +801).
In this model, giving welfare is a coordination problem. From the point of view of one well-off person, it would be best to give nothing while all the other well-off people gave alms to the poor and worst to give to the poor while all the other well-off people gave nothing, and of the two coordinated solutions the one where everyone gives is better than the one where nobody gives. People used to try to solve this coordination problem by reputation, norms, etc. (judging almsgivers as virtuous and non-givers as vicious), but it gets harder to make that sort of solution work as society gets larger and more diffuse, with more interactions happening through impersonal markets and rule-based governments rather than within tightly-knit communities. Now people try to solve the coordination problem by getting the government to force everyone to participate.
That’s a great explanation. But it still leaves the mystery of why everyone must participate. In your example, coordinating charity with 100 other givers is already a good deal for all involved. Since such deals aren’t happening spontaneously as much as they could, it seems like something else is going on. For some reason society-wide coordination is needed.
I think the missing piece is that, apart from diminishing marginal utility, the preferences of well-off people are partly positional. If you give 1% of your income to charity and Bob doesn’t, that gives Bob a small chance to get ahead of you, and that just won’t do. Even if 100 other well-off people do the same as you, that still lowers your position relative to most well-off people. But if all well-off people give 1% of their income to charity, the problem disappears.
A standard consequentialist model for welfare is that 1) each person cares about every person’s well-being at least a little, but cares about themself much more and 2) a dollar goes farther at purchasing increased well-being in the hands of a poor person than in the hands of a well-off person.
For example, say that each person values themself 100x as much as they value another person and a dollar goes 10x farther in the hands of a poor person than in the hands of a well-off person. From the point of view of a typical well-off person, me getting a dollar is worth 100 utils (let’s say, to set the scale), some other well-off person getting a dollar is worth 1 util (since I value them 1⁄100 as much), and some poor person getting a dollar is worth 10 utils (since I value them 1⁄100 as much and they get 10x as much well-being per dollar).
So one well-off person giving a dollar to a poor person is net negative according to the giver’s preferences: −100 utils from losing a dollar plus 10 utils from a poor person getting a dollar (-100 + 10 = −90). But if 100 well-off people coordinate to each give a dollar to a different poor person then that is net positive or according to the preferences of one of those well-off people: −100 from losing a dollar, minus 99 from 99 other well-off people each losing a dollar, plus 1000 from 100 poor people each getting a dollar (-100 − 99 + 1000 = +801).
In this model, giving welfare is a coordination problem. From the point of view of one well-off person, it would be best to give nothing while all the other well-off people gave alms to the poor and worst to give to the poor while all the other well-off people gave nothing, and of the two coordinated solutions the one where everyone gives is better than the one where nobody gives. People used to try to solve this coordination problem by reputation, norms, etc. (judging almsgivers as virtuous and non-givers as vicious), but it gets harder to make that sort of solution work as society gets larger and more diffuse, with more interactions happening through impersonal markets and rule-based governments rather than within tightly-knit communities. Now people try to solve the coordination problem by getting the government to force everyone to participate.
That’s a great explanation. But it still leaves the mystery of why everyone must participate. In your example, coordinating charity with 100 other givers is already a good deal for all involved. Since such deals aren’t happening spontaneously as much as they could, it seems like something else is going on. For some reason society-wide coordination is needed.
I think the missing piece is that, apart from diminishing marginal utility, the preferences of well-off people are partly positional. If you give 1% of your income to charity and Bob doesn’t, that gives Bob a small chance to get ahead of you, and that just won’t do. Even if 100 other well-off people do the same as you, that still lowers your position relative to most well-off people. But if all well-off people give 1% of their income to charity, the problem disappears.
Very reasonable, thank you!