Governments set up a couple of hacks to counter this effect : taxes, and tax deductions for donations.
There are probably better solutions, and we’ll probably be reading about them here :)
Is there a more detailed psychological evaluation of the “spending money is like losing hitpoints” side of things? What bugs us the most? I don’t think it’s losing money as much as “spending money on something on which other people don’t”, with the associated mental image of being a sucker. It’s some kind of reverse “keeping up with the Joneses”, and I wouldn’t be surprised if people (including me!) had the same kind of psychological resistance to unusual spendings that would actually benefit to themselves, such as taking a (paying) course in personal finance.
With donating money, there’s also a disconnect between donating the money and the resulting action. If you fly to Haiti yourself and build houses, you immediately see the results and get to signal to all of your friends that you are the type of person that donates your college spring break to helping the less fortunate. If you instead donated $1500 to Direct Relief International, your friends would pat you on the back but you would likely gain more status by doing it yourself.
So I think there are significant issues of status here—a lawyer volunteering at the soup kitchen gets to signal that they have compassion for the poor. A lawyer donating $1000 to issues of local poverty really does have compassion for the poor, but isn’t signalling it as strongly as doing the work themselves.
Governments set up a couple of hacks to counter this effect : taxes, and tax deductions for donations.
There are probably better solutions, and we’ll probably be reading about them here :)
Is there a more detailed psychological evaluation of the “spending money is like losing hitpoints” side of things? What bugs us the most? I don’t think it’s losing money as much as “spending money on something on which other people don’t”, with the associated mental image of being a sucker. It’s some kind of reverse “keeping up with the Joneses”, and I wouldn’t be surprised if people (including me!) had the same kind of psychological resistance to unusual spendings that would actually benefit to themselves, such as taking a (paying) course in personal finance.
With donating money, there’s also a disconnect between donating the money and the resulting action. If you fly to Haiti yourself and build houses, you immediately see the results and get to signal to all of your friends that you are the type of person that donates your college spring break to helping the less fortunate. If you instead donated $1500 to Direct Relief International, your friends would pat you on the back but you would likely gain more status by doing it yourself.
So I think there are significant issues of status here—a lawyer volunteering at the soup kitchen gets to signal that they have compassion for the poor. A lawyer donating $1000 to issues of local poverty really does have compassion for the poor, but isn’t signalling it as strongly as doing the work themselves.