Altruistic Economics

A presentation by Dr. Robin Upton. BRAC University, 2005-03-07 18:00

Available for download at www.altruists.org/ae5

Attribution – NonCommercial - ShareAlike

Talk Structure

www.altruists.org

A Relationship-BasedTrading Model

Failure . Failure of Classical Assumptions

Talk Structure

1. Assumptions of the Market Economy

2. An Alternative Assumption

3. Model Modification

4. Model Developments

. i. ‘Perfect’ Information

Firstly…

i. ‘Perfect’ Information

iii. Relationships in the ‘Perfect’ Market

Then we consider the nature of

1. Assumptions of the Market Economy

ii. Impartial Support Systems

Nowadays…

i. ‘Perfect’ InformationOnce upon a time, a long, long time ago, shops were small.

How much it cost

What the quality was like

In the market, everyone knew…

Everything that was on sale

Nowadays

Nowadays …

Times have changed

Equal Access To Credit?

ii. Impartial Support Systems

Law

Finance

A healthy economy requires fair access to other systems, such as:

. Equal Charges for Credit?

Equal Access to Credit?

“More than ½ the population of the world… do not qualify to take out a loan from a bank…

Muhammad Yunus

…My vision for the future?… to make credit a human right.”

Equal Charges for Credit?

Credit is … Interest…

Expensive for the poor.

moves money from poor to rich.

German Household Groups According to Income

Money Movement due to Interest - 1980Money Movement due to Interest - 2000

Payment Income

Source: 1980 – A Changing Money System (M. Kennedy)

2000 – Bundesbank figures (H. Creutz) .

Legal Example

• We do what we want• We are not liable, whatever• Click to proceed…

Legal Summary

Legal Example

Agree

Consider the typical software EULA…

TERMS AND CONDITIONS

. iii. The ‘Perfect’ Market

Legal Summary

lawyers cost a lot of money !Anyway…

money = legal power So…

. Relationships in the Market

iii. The ‘Perfect’ Market

Modern Economics owes more to mathematics than psychology. The market as modelled is…

not about PEOPLE;

all about PRICES.

www.paecon.net

. Personal Relationships

Relationships in The Market

‘Perfect’ market relationships are …

self-interested not altruistic

short-term not long-term

money-centred not people-centred

. 1. Market Economy - Summary

Personal Relationships

‘Perfect’ personal relationships are …

altruistic not self-interested

long-term not short-term

people-centred not money-centred

t. 2. An Alternative Assumption

Some assumptions are outdated

1. Market Economy - Summary

Disharmony between Market & Personal values

2. An Alternative Assumption

. Modelling Relationships

Classical Economics Altruistic Economics

THEORETICAL ASSUMPTIONS

PRACTICAL EFFECT

Disharmony between

Market & Personal Relationships

People Care About One

Other

?

Perfect Information

Impartial Support Systems

Selfish Individuals

Modelling Relationships

. Differentiating Relationships

1. Relationships exist between particular individuals …

Relationship

Differentiating Relationships

Sympathy, s

2. Express different types of relationships…

…by adding a numerical element.

Sympathy, S

“Emotional Proximity” ~ s > 0 for Friendships

No Love At All

Network of Care

Love Like Self

0 1

Network Of Care

. Trading A to B

www.altruists.org/355

A B C

D

SBC

SCB

SBD

SAB

SBA0.25

0.4

Aysha Cares for Birbal Birbal Cares for everyone else

Christopher Cares for Birbal Dipti Cares for no one

Aysha has a Sympathy of 0.4 for Birbal, so

SAB=0.4

Trading A to B

. Birbal Needs Help!

A B C

D

SBC

SCB

SBD

SAB

SBA0.25

www.altruists.org/355

0.4

Aysha Cares for Birbal Birbal Cares for everyone else

Christopher Cares for Birbal Dipti Cares for no one

Consider a trade between A & B …

Birbal Wants Help!

Birbal has a computer problem,

so he publishes this fact:

Aysha Can Help

User Type of Work Requested Rate

B Computer Repair

He estimates: 1 hour of competent help would save him 6 hours of his own effort.

6

Aysha Can Help!

Aysha is a computer engineer:

. Selfish Transaction Evaluation

User Type of Work Offered Rate

A Computer Repair

She estimates: 1 hour she spends = 1 hour of competent help

-1

A B

0.25

0.4

IndividualisticEvaluation

A B

-1 6

Individualistic Transaction Evaluation

. NON-Zero Sum System

Score using 2 self-evaluated time costs.

User Work Offered Rate

A Computer Repair -1

User Work Requested Rate

B Computer Repair 6

Individuals’ Scoring is Independent

NON-Zero Sum System

Zero-Sum System

(-1,+6)

Good for Both

Bad for BothGood for A,

Bad for B

A

B

+

+

-

-

Good for B,

Bad for A

Independent scoring is NON-Zero Sum

A+B=0

www.altruists.org/392

0,0

Zero Sum System

Money is Zero-sum => (p,-p)

. Price = Systemic Conflict

* ‘Making money’ is a euphemism; only forgers and central banks actually make it …

A+B=0

Good for Both

Bad for BothGood for A, Bad for B

A

B

+

+

-

-

Good for B, Bad for A

(-p,p)

No one here ever makes* money…

Price = Systemic Conflict

. Individualistic Transaction Evaluation

Real Value (hidden)

Real Cost (hidden)

Price P,

Splits the benefit A & B.

www.ledgerism.net/theInfoGap.htm

www.altruists.org/384

A+B=0 B+

-

-

(-1,+6)

A +

6

-1

(-p,p)

Good for B, Bad for A

Benefit for A = P - 1

Benefit for B = 6 - P

A & B have directly opposite

interests!

IndividualisticEvaluation

A B

-1 +6

Individualistic Transaction Evaluation

. Altruistic Transaction Evaluation

Use of 2 self-evaluated time costs…

Removes systemic competition!

Use the Network of Care to modify this evaluation.

AltruisticEvaluation

A B

Altruistic Transaction Evaluation

. Indirect Sympathy

Now apply the sympathy values…IndividualisticEvaluation

A B

-1 +6.25

.41

1

A B

0.4

0.25

+6-1

+0.4x+6

+.25x-1

AltruisticEvaluation

A B

1.4 5.75

Indirect Sympathy

. 2. Alternative Assumption - Summary

Sympathy is not only for one’s own friends …

A B

0.4

SBA

C

0.3

SCB

SAC = SAB x SAC = 0.4 x 0.3 = 0.12

A has indirect sympthy for C:

2. Alternative Assumption - Summary

. 3. Model Refinement

Publish sympathy for friends.

IndividualisticEvaluation

A B

-1 +6

AltruisticEvaluatio

n

A B

1.4 5.75

Before trading:

Evaluate trade:

Publish offers/requests.

ASAB B

Use sympathy values to revise

Record trade: Publish post hoc feelings.

User Work Offered RateA Computer Repair -1

User Work Requested RateB Computer Repair 6

->

3. Model RefinementLimited Sympathy

• If you would spend 10 to save someone 50, does that mean you would also spend 1,000 to

save them 5,000?

. Non-Linear Sympathy

• There are limits to what we do for others. Sympathy limits reflect that.

• Could you spend 1Crore to save them 5Crore?

Non-Linear Sympathy

. Modelling Sympathy

• Sympathy is not constant

• Gradient increases with Time Given

Gradient = 3

Gradient = 20

• People run out of sympathy & get gradually less sympathetic

Modelling Sympathy

Multiplier = 1/s

Approximate the curve with straight lines:

Express the sympathy as

Length 5h, gradient 2, so write it (5h 2)

Length 5h, gradient 10, so write it (5h 10)

Multiplier = 1/s

. Sympathy Vectors

A is willing to spend up to 5 hours to save 10 hours for B

Hence, sympathy =5h/10h= 0.5

We will be looking at 1/s, which we

call the multiplier = 2 in this case

Sympathy Vectors

. A & B Computer Example

Lengths of Time

Multipliers

5h 2

5h 10

A & B Computer Example

. Sympathy as Credit

Suppose A cares for B as follows:

B gains six hours for every hour of input from A, so the transaction has a multiplier of 6.

However, she will not work any more for B, since 6<10, so that a multiplier of 6 is insufficient.

A will put in 5 hours of work for B (because 6>2)…

User Work Offered Rate

A Computer Repair -1

User Work Requested Rate

B Computer Repair 6

Sympathy as Credit

. Calculation of Indirect Sympathy

• Increasing multipliers ~ reluctance to work altruistically as input is used up

2h 11h 22h 31h 41h 71h 101h 131h 15

• Curves can be modelled as closely as is required

Calculation Of Indirect Sympathy

.Conflation - SABC

4 A

A’s evaluationB’s evaluation

12 B = 24 C.

Cheapest Rate (3):

Cheapest Rate (2):

Cheapest Rate (3):

Next Rate (6):

Next Rate (4): +24B = 96 C6 A = 18 B

1 A = +6 B

= 12 B

Conflation - SABC

. Combination of Multiple Paths

A evaluates B evaluates Overall4 A = 12 B 12 B = 24 C 4A=24C6 A = 18 B 18 B = 72 C 6A=72C1 A = 6 B . 6 B = 24 C 1A=24C

4h 6

6h 12

1h 24

SABC =

Combination of Multiple PathsIf A also cares for D, who cares for C…

We know

SABC =

4h 6

6h 12

1h 24

Calculate

SADC =

15h 2

2h 5

3h 10

2½h 20

. Intelligent Path Choice

Intelligent Path Choice

3. Modified Model - Summary

A has 2 sympathy paths to C, A B C & A D C:

Simply order the different time values by multiplier:

The combination, SAC =15h 2

B

D

B

DDDD

BB

• SAC ‘contains the intelligence’ of

alternate paths of sympathy

2h 54h 63h 106h 122½h 201h 24

3. Modified Model - Summary

. 4. Model Developments

Conflation: A B C A C

Combination: A C A C

So, sympathy can be calculated between any 2 nodes on a

Network of Care…

Sympathy expresses care for particular others.

Each relationship has a sympathy vector.

4. Model Developments

• Recording Work Done

• Range Of Applications

• Multiple Currencies

• Delegated Voting

•Relationship Credit

. Recording Work Done

Many Open Areas of Research …

Recording Work Done

. Swinging of Relationship Credit

• Scoring would encourage people to give more.

• Fairness is satisfied if, for any pair of nodes, resource flow from A B is about equal to the flow from B A

AB

Swinging of Relationship Credit

. Range Of Applications

• Work Balance can be pushed out in either direction…

A B

40h 120h 220h 420h 108h 20

SAB=

• Effect of variable multipliers is to restore the equilibrium

40h 20h20h

20h

8h

40h40h 120h 220h 420h 108h 20

SBA=

40h 1 40h 120h 220h 420h 108h 20

20h 240h 1

Range Of Applications

. Multiple Currencies

Altruistic Economics could apply at many levels.

Each node could represent, for example…

A person

A family

An idea

• A project

• An NGO

• A country

Different levels could coexist, adding greatly to the power & flexibility of the system.

Multiple Currencies

. Voting As Currency

• Users offer whatever currencies they like

• Users publish personal rates of conversion between different currencies to allow efficient flow between them.

• Survival of the fittest will decide which are used

Patients Treated

Meetings Held /Day

Staff /PersonDays

Volunteer Assistance /PersonDays

Taka

. Ranking By Relationship Credit

Suppose…

1. Everyone receives one unit of a new resource;

2. It can be kept or transferred to others at will;

3. Whoever has the most units of this resource at a set time receives special treatment.

• This is a delegated voting system

Voting as Currency

An Altruistic trading system

could rank people by contribution

made.

Offers Requests

Robin Upton, +160h –45h, Rate= -0.2Computer Hardware, Statistics, Foreign Languages, Bangladesh Contacts …

Kevin Towell, +14h –3h, Rate= -0.2Computer Hardware, Motorbike repair, Shop Management, Psychology …

James Beckett, +60h –15h, Rate= -0.35Computer programming, Computer Hardware, Electronics, Internet Advice …

Angela Robinson, +550h –175h, Rating= 70h Can you help me with my Laptop? The E-mail is giving me a lot…

Mike Channel, +120h –40h, Rate= 10hHelp! My scanner doesn’t seem to work. I urgently need it to do a job on Nov. …

!!

Graham Upton, +3h –2h, Rate= 20hI just can’t get my Wireless LAN working properly. It keeps cutting out, just …

Need to Reward Generosity not selfishness…

Computer/Hardware/Repair

Relationship Credit

. Gratuitous Self-Publicity!

This would reward altruism by

meaning that the most generous

people’s requests were met more

quickly...

Altruistically-Minded others to help program

An Internet communication layer necessary to implement

Altruistic Economics - www.altruists.org/ae

WANTED !!!