Centre for Positive Psychology and Education

Altruism and economics have difficult, often turbulent, relationships: Adam Smith, the father of economics, found it difficult to reconcile the “virtue of prudence” (self-interest) with the “virtue of beneficence” (altruism). Hence, till the early 1980s, the modern economics had chosen to ostracise altruism from its analytical artefacts before the floodgates were open by the work of Arrow (1981), Samuelson (1993) and Sen (1995).  The dissatisfaction with the economics of self-interests became wide-spread among economists of all persuasions in the 1980s due to a set of factors that I will discuss in my presentation. In the 1990s Herbert Simon (1993, 1996, 1997a) and Oded Stark (1995) laid down the analytical foundation of (intelligent) altruism in economics on the basis of evolutionary fitness – the concept of the “survival of the nicest” burst to the scene. The gradual consolidation of experimental economics as a major field of economic science in the 1990s motivated economists to understand the psychological foundation of altruism and also causes and consequences of altruism from well-crafted experiments (see  Fehr, E., Gächter, S., 2002; Fehr, E. and Fischbacher, U., 2003; Fehr, E. and Rockenbach, B., 2003). In economic theory, in recent years, altruism and ethics are crucial in explaining an economic outcome (equilibrium) – see Sen (1997); Rabin (1998), Gangopadhyay (2000) among many. My current work is motivated by a major gap in the extant literature: first and foremost, the current work on altruism in economics strains the traditional framework of economics in which agents make their decisions as rational, or boundedly rational, agents. Secondly, the recent work on altruism and reciprocation utilise laboratory-based experiments to understand altruism. In my opinion, both these approaches have a major weakness in understanding altruism. My point of departure from the recent work in altruism has its foundation in Adam Smith’s 1759 book entitled “Theory of Moral Sentiments” in which Adam Smith forcefully argued that altruism is driven by an unobserved and often instantaneous emotion called “sympathy” and not by cold, hard and rational calculations. Unfortunately, the existing economic theory and the experimental economics both fail to capture altruism as an emotional entity, or latent variable. In my work I develop a model to represent altruism as a latent variable for which I have multiple and imperfect indicators. By applying the standard model of MIMIC I derive a multidimensional index of altruism within a household. From a survey I obtain household characteristics and also their (filial) care-arrangements to measure altruism as an emotion in order to understand the factors that shape, fuel and drive altruism within a household.

Partha Gangopadhyay has an international reputation as an analytical economist with a focus on the behavioural foundation of economics mainly in the context of conflict and peace. He had the opportunity to study at the leading schools and universities of India, fully supported by merit scholarships, and obtained a first class honours degree in economics from Presidency College, commonly known as the Harvard of India, and a Masters Degree in Economics from Jawaharlal Nehru University before migrating to Australia in 1989. Since 1994, upon receiving a PhD in economics at the University of Sydney, he has published more than 70 refereed journal articles, books and book chapters. His contributions to economics are globally recognised: he has held a chair professorship in economics and social research in Germany (2000-2002) and visiting professorships at State University of New York (Binghamton), Boston University, Jawaharlal Nehru University, Rajiv Gandhi Foundation, Indian Statistical Institute and Delhi School of Economics etc. During the last decade he has been successful in creating a global interest in  impacts of globalisation on regional conflicts and human security: as an example in 2005 he published two edited volumes on this particular facet of globalisation and attracted serious contributions from many accomplished scholars of our time like Jeffrey Sachs, Ken Arrow (Nobel-laureate), Paul Krugman (Nobel-laureate), Peter Nijkamp (former Chief of Research Council of Netherlands) and Larry Summers (former President of Harvard university). He has been on the editorial boards of half-a-dozen reputed international journals to advance research on various aspects of individual and group decisions. He regularly provides research inputs and advice to Asian Development Bank, Institute for Economics and Peace, Australian Research Council, Research Council of Hong Kong etc.. In recent years he has given keynote addresses in national and international conferences on human behaviour & security in China, India and the United Kingdom. He has chaired, organised and coordinated many national international conferences across the globe.