- Mar 07
- 2 min read
Altruism and information deficits: What snowstorms teach us about economics
As published in City AM Wednesday 7th March 2018
Written by Paul Ormerod, Cowry's Chief Economist and a visiting professor at University College, London, and auth or of Positive Linking: How Networks can Revolutionise the World.
While weather may not seem like a typical economics topic, there are always interesting aspects to behaviour in any context.
Quite a number of drivers, for example, appear to have ignored notices of road closure. They drove on regardless, until becoming stuck in the snow.
In Greater Manchester, which seems to have been the vortex of the storm, the police had to put out a special appeal on this.
Part of this apparently irrational behaviour was undoubtedly due to sheer stupidity, or even to a lack of basic literacy. But for others, the response may have been more rational.
Almost all motorists will have encountered flashing lights on a motorway to slow down for an “incident” or “debris in road” or some such thing. But a good proportion of the time, the problem has been solved already. The authorities have simply been slow to switch the warnings off.
In short, the experience of motorists leads some at least to doubt the validity of the information provided by the authorities.
How do they know whether they can trust the accuracy of the information when they have been misled in the past? Alternatively, they can choose to believe it, but if it is actually false, they will suffer substantial inconvenience.
So, in the humble context of a “road closed” sign, we see some of the key issues which surround fake news on social media.
On a more cheery note, there have been numerous accounts of stranded drivers being helped by the local community.
A prominent example was in Rochdale, where vehicles were trapped on the M62, in winds over 90mph. One man was offering hot tea to motorists for £1 a cup. He was hardly profiteering. But even so, the volunteers were scandalised – they were providing tea for free.
This altruistic behaviour may seem to challenge the very basis of economic theory. In the popular view, economics sees people acting purely in their own self-interest.
Giving blood is a classic case often used to attack economics. Surely, it is argued, this is pure altruism.
Certainly, all the adverts urging you to be a blood donor focus on this motive. Admittedly, you get a free drink and biscuit as part of the process. But the benefits from this can hardly be said to be worth the time and effort involved.
A fascinating paper published by the prestigious US National Institutes of Health in 2014 challenges the view that blood donors are motivated by pure altruism.
The Nottingham University psychologist Eamonn Ferguson did some neat analysis with a survey of blood donors. He examined a range of motivations, but the most important was what he described as “warm glow” altruism.
People who gave blood derived personal benefit from the positive emotional gains associated with donating.
We do not, of course, know whether the motorway helpers were motivated by “pure” or “warm glow” altruism. But economics can find things of interest even in the gloomiest situations.