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Household Production Function
approach to charitable behavior
Northeast Normal University 5/22/2014
Wei-Chiao Huang
Western Michigan University
Fulbright Professor to China, 2013-14
[email protected]
Mobile: 133-3112-4436
I. Introduction: wearing two hats
1. Current position in the U.S. and China: a sales
pitch for the Fulbright Program.
2. Educational background & experience: from
Taiwan to the U.S.
3. Professional experience: working and living in the
U.S.
Ambassador Locke
Timothy Light Center for Chinese Studies
2012-2013 Annual Report
Econ 6990: Household Production, Human
Capital, and Analysis of
Some Seemingly Non-Economic
Human Behavior
What do sex, contraceptives, marriage, divorce,
suicide, charity, alcohol or cigarette addiction,
religion, crime, homicide, and punishment have
in common with consumption, production, price,
labor market, inflation, monopoly, and exchange
rates?
The answer is that the former are all aspects of
human behavior, which, like the latter, can be
analyzed and modeled using conventional economic
approaches. The application of economic reasoning
to human behavior, which was until recently
considered to be beyond the scope of economic
analysis, was pioneered by Gary Becker, the 1992
Nobel Laureate in Economics.
Becker's excursions into sociology, anthropology,
and political science led him to think about
issues such as marriage, religion, and crime in an
entirely new way, and eventually to assert that
all actions, whether working, playing, dating, or
mating, have economic motivations and
consequences.
The general objective of this course is to
introduce Becker's work and ideas and to
illustrate to students the ways in which the
standard tools of economics can be used to
understand a wide range of human actions.
Traditional Theory
Max. U = U(X1, X2,….Xn)
s.t. I = ∑ Pi Xi
Solutions: e.g. FOC: (MU1/ MU2) = (P1/ P2)
X1 = d1(I/P, P1/P, Pi/P, T)
New Approach
Max. U = U(Z1, Z2,….Zn)
s.t. Zi = Zi (Xi, ti, E)
with T = tw + ∑ti and I = ∑PiXi
or together S = wT + V = ∑(wti + PiXi)
FOC: (MUi/MUj) = [w(dti/dZi) + Pi(dXi/dZi)]/
[w(dtj/dZj) + Pj(dXj/dZj)]
= (πi/ πj)
Applications of HPF Approach
Analyzing suicidal behavior: A “Life
Market” Participation Perspective of
Suicide (treating the utility generating
“life income” as a Z variable, i.e.
Becker’s type of household production
commodity.)
Applications of HPF Approach
Analyzing charitable behavior: Labor
Supply, Voluntary Work, and
Charitable Contributions in a Model of
Utility Maximization (treating a utilitygenerating composite commodity that
accommodates every motive for
charity as a Z variable)
Motivation for Charity
It is hard to model charitable behavior: Self
Interest? Altruism? Or Combination of both?
Our broad approach to modeling charity:
Individuals act charitably to attain something(s)
they cherish.
Generous or Greedy Marriage? Einolf & Philbrick
Journal of Marriage and Family June 2014
The authors examined how marriage affects
volunteering and charitable giving, using
longitudinal data from the 2001 to 2009 waves
of the Panel Study of Income Dynamics. Newly
married men, but not women, were significantly
more likely to give money to charity in the first
survey wave after marriage and gave larger
amounts of money.
Generous or Greedy Marriage? Einolf & Philbrick
Journal of Marriage and Family June 2014
Newly married women, but not men, were
significantly less likely to volunteer after
marriage and volunteered fewer hours.
Marriage had a stronger positive effect on men's
giving in the second wave after marriage than
after the first.
Does religion foster generosity? Roy
Sablosky Social Science Journal 4/2014
This paper reviews recent studies that claim to
provide support, through statistical analysis of
survey data, for the traditional proposition that
being religious makes people more generous.
The studies have serious shortcomings. First, the
data consist exclusively of self-reports.
Does religion foster generosity? Roy
Sablosky Social Science Journal 4/2014
Second, the dependent and independent
variables are conceptually problematic and illdefined. Third, the positive correlation between
religious involvement and personal generosity
may be due to selection bias. Moreover, it has
been directly controverted by experimental
studies of economic and other behaviors.
why suggestions work in charitable fundraising
Edwards & J. A. List J of Pub Econ June 2014
Our study examines how suggestions–a direct
ask for a certain amount of money–affect giving
rates. We find that more people give and they
tend to give the suggested amount. The results
help understand why people give, why messages
work, and how to use messages to leverage
more giving.
Policy Implications
Fundraising strategies.
Volunteering promotion strategies.
Joke– Executive responding to Red Cross
rescuer: “Get lost! I already donated at the
office!”