The Hindu Business Line : Getting closer to society

The other day, my friend and I were discussing about charity. My friend was of the opinion that charity is a selfless act. My contention was that it is not. Philosophy aside, is voluntary service — a form of charity — good economics?

Suppose your monthly income is Rs two lakh, which translates into an hourly income of Rs 1,000. You decide to skip work for a day and do voluntary service at a local village. Your job is to plant trees. You toil for eight hours and are thoroughly satisfied with your contribution.

It is difficult to price the satisfaction. But step back and apply basic principle of economics. You lost eight hours of work or Rs 8,000. What if you had donated the money to a charitable organisation? They could have used that money to plant more trees. How?

With Rs 8,000, the charitable organisation can hire several workers to do the job. And they can plant more trees than you did in eight hours.

Economic output

Important, the organisation would have provided employment to some workers. Besides, you would have contributed to the economic output of your company had you been in the office.

The explanation is straightforward. Yet, we commit what economists call as “Volunteers Folly”. That is, we take time off to do some voluntary work even though it is not good economics. Why?

A selfless act?

One reason could be that we are communal beings and charity is a way to give back to society that has given us so much. Another reason could be that it brings us closer to other people and nature.

But is charity altruistic? Altruism refers to unselfish regard for or devotion to the welfare of others. A dominant motivation for most of us is the internal satisfaction that we derive from the very act of giving. This satisfaction is similar to the one we derive from hosting a Saturday night party or buying gifts for friends. Of course, charity is more honourable. But does that make it a selfless act?

(The author is an investment strategist.)

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