New research published in the April 2007 Economic Journal demonstrates that we care about the wellbeing of other people, but in a ”paternalistic” manner. The study by Magnus Johannesson and colleagues shows that we care more about the health of other individuals, than about other aspects of their consumption.
This provides a rationale for why healthcare is heavily subsidised in most Western countries, a fact that has previously been considered a puzzle among economists.
It also provides an argument for paternalistic health policies like smoking regulation, mandatory seatbelt use and mandatory use of bicycle helmets. The reason that a policy to force cyclists to wear bicycle helmets can benefit society as a whole is that it improves the wellbeing of other individuals that care about the cyclists” health.
The researchers demonstrate these results in an experiment where individuals could choose how to divide a sum of money between themselves and a diabetes patient who smokes.
The money given to the diabetes patient could either be given in cash (in which case the patient could use it for anything they wanted) or converted to nicotine patches at the market price. The diabetes patient preferred to get cash, but was willing to try nicotine patches to stop smoking if someone else paid for them.
An individual that is a pure altruist should respect the preferences of the diabetes patient and give cash. An individual that is a paternalistic altruist should give nicotine patches to maximise the health of the diabetes patient.
It turned out that almost all donors in the experiment gave nicotine patches rather than money, demonstrating the importance of paternalistic preferences. The experiment was repeated under a range of different circumstances (with, for example, donations of exercise instead of nicotine patches), yielding similar results.
”Is Altruism Paternalistic?” by Fredric Jacobsson, Magnus Johannesson and Lars Borgquist is published in the April 2007 issue of the Economic Journal.
Lars Borgquist
Linkoping University
Magnus Johannesson
Stockholm School of Economics | +46-8-736-94-43 | magnus.johannesson@hhs.se
