Opening-up the objective function: choice behavior and economic and non-economic variables—core and marginal altruism

A revised model of the preference function is presented incorporating utility maximizing acts of material self-sacrifice. This model incorporates neoclassical and behavioral arguments, allowing for the stylized fact that economic agents are motivated by both material and non-material incentives. Given such a preference function, choice behavior is modeled as a function of relative opportunity costs (price) and real income. Preferences are determined by a variety of variables inclusive of social capital and education. There is therefore a core preference based upon non-economic variables and a ‘marginal’ component which is a function of conventional economic variables. The relative importance of these two components in determinating choice behavior is an empirical question. Building upon conventional tools, a demand curve for moral acts is derived and underlying income and substitution effects discussed. Empirical evidence from the tipping literature is used to illustrate the model. A version of this paper was presented to the 30th Annual Congress of the International Association for Research in Economic Psychology (IAREP), Prague, Czech Republic, September 21-24, 2005. The authors thanks session participants and Louise Lamontagne for their comments and suggestions. The standard caveat applies. Citation: Altman, Morris, (2006) "Opening-up the objective function: choice behavior and economic and non-economic variables—core and marginal altruism." Economics Bulletin, Vol. 4, No. 33 pp. 1-7 Submitted: September 19, 2006. Accepted: October 16, 2006. URL: http://economicsbulletin.vanderbilt.edu/2006/volume4/EB-06D00022A.pdf