Mike D’s utility

Mike D commented on this post:

Let’s think about two axes here. On the x axis, put altruism (the weight my assessment of your utility has in my utility function) and on the y axis, put respect (if I assess your situation using my utility function, respect = 0, if I assess your situation using what I think is your utility function, put respect =1, and interpolate between these two).

It seems obvious why altruism decreases with distance/dissimilarity. I would submit that respect is more subtle.
1) Proximity decreases respect, as I may suffer alleged externalities (real, pecuniary, or psychic) from your choices, so I have a selfish motive to override your preferences.
2) Proximity also increases respect, because your internal emotional life becomes more real and vivid to me, instead of a highly abstracted model.

So the utility function looks like this:


where big U is total utility for the individual, little u is his Robinson Crusoe utility, little v is the other person’s utility, x is the individual’s consumption and y is the other person’s consumption. According to Mike D, the parameter’s of that utility function behave like this:
There has to be some experiment, natural or otherwise, that would let us estimate these parameters and see how they vary with social distance.

2 thoughts on “Mike D’s utility”

  1. The line is mapping the similarity/proximity expansion path? I’d quibble that similarity and proximity aren’t the same thing. I think similarity matches with social distance. Proximity matches better with actual distance (or some other measure of how strongly externalities affect me.) E.g. I may be highly tolerant of someone’s desire to smoke until they become my neighbor or coworker. So I’d argue that we need to have the altruism parameter alpha be a function of similarity and proximity and the respect parameter beta b a separate function of similarity and proximity.

    Natural experiments might include things like looking at the effect of religious and ethnic diversity on the cross-country differences in size/strength and design of welfare states. (e.g. How large are welfare states compared to GDP? How much of the transfer is preference-respecting cash vs. in-kind or voucher?)
    There are natural experiments used to measure the impact of immigration on labor markets. (The Mariel Boatlift comes to mind.) Maybe those could be used.

    There are lots and lots of lab experiments that claim to test altruism. Nuff said. I’m not so sure about lab experiments designed to test respect… that requires further thought.

    I’m sure you don’t need distractions from your thesis, but if you’re interested in pursuing these further, drop me an email.
    Mike Dennis @ College of the Redwoods

  2. Let me self-comment on my comment:
    I think we need to be careful distinguishing between my desire to influence your consumption activities like the smoking or giving your house curb-appeal which generate real technological externalities and my desire to influence your consumption activities to steer you away from bad and towards good activities, where both bad and good are in my estimation of what’s good for you.

    Of course, it’s psychologically plausible that as I become affected by the real technological externality of the smoke smell on your clothes as you sit in the next cubicle, I suddenly become much more paternalistically concerned with the damage you’re doing yourself.

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