About Rationally Speaking

Rationally Speaking is a blog maintained by Prof. Massimo Pigliucci, a philosopher at the City University of New York. The blog reflects the Enlightenment figure Marquis de Condorcet's idea of what a public intellectual (yes, we know, that's such a bad word) ought to be: someone who devotes himself to "the tracking down of prejudices in the hiding places where priests, the schools, the government, and all long-established institutions had gathered and protected them." You're welcome. Please notice that the contents of this blog can be reprinted under the standard Creative Commons license.

Tuesday, July 17, 2007

Taxation vs. charitable donation: the way your brain sees it

As is well known, the United States is characterized by lower taxes and more charitable giving than European countries, and economists have proposed that the two forms of financially supporting the public good represent an example of inherent trade-off (i.e., one is unlikely to be able to engineer a society were both charitable giving and taxes are high).

Psychologists have suggested two models of human behavior to account for these phenomena: the “pure altruism” theory suggests that people are happy that something is done for the public good, regardless of whether this is achieved through taxation or donations. The alternative, “warm-glow” model says that people prefer charitable giving over taxation because they feel good about making personal decisions on how much to give and to whom (this, of course, entirely sidesteps the thorny problem of whether individuals who give to charities do so in an informed way, or whether their actions maximize social benefits).

An article recently published in Science (15 June) by William Harbaugh, Ulrich Mayr and Daniel Burghart (of the University of Oregon and the National Bureau of Economic Research) tackled the problem by looking directly at the brain activity of subjects facing various combinations of taxation and choice in charitable giving. The research was based on previous knowledge showing that some areas of the brain – in particular the ventral striatum and the insulae – are involved in providing information on the relative rewards of different choices made by a subject, including social rewards.

The results are both scientifically interesting and socially useful. First of all, it turns out that there are, in fact, altruists and selfish people (ok, no big surprise here). Altruists have a larger neural response when a charity is getting money rather then when the money goes to them, while the egoists' brains behave in the opposite fashion. Accordingly, altruists in the study were twice as likely to give money than egoists (58% vs. 31%).

More importantly, Harbaugh and collaborators found evidence for both the pure-altruist and the warm-glow theories: it turns out that while people do get a neural reward when they are responsible for the charitable choice, they also respond with (neural) satisfaction when they see increased payoffs going to charities through taxation – indeed, the same brain structures are responsible for both outcomes. In other words, at least at the level of brain function, there is no reason why we couldn't work toward a better society where people are fairly taxed to further the public good and at the same time they are encouraged through incentives to give money to charities. Whether the cultural, and particularly the political, forces at play will ever allow such a constructive merger between the American and the European models is, of course, an entirely different matter.


  1. You propose that Charitable giving like Americans combined with the tax rate of the French will better our society. Of course you are assuming that increased tax rates automatically lead to increased tax income. It is not that simple. We assume that tax money comes from thin air (or from the rich that just do not need it anyway). It comes directly out of the economy (be it Rich money or not). I agrue that increased tax rates creates more less fortunate people than it helps. The reason that Americans can donate so much to charity is due to our lower tax rates. One directly affects the other. Any economist will tell you how all these factors are directly related.
    So it is not so simple to just merger the American and European, in fact impossible. The question really is which is better? The American model or increased socialism?

  2. taxation is theft. there is no such thing as a fair tax. a country where everyone had all money they earn and could spend freely would result in better funded charities. the government squanders our money.

  3. "taxation is theft. there is no such thing as a fair tax."

    Oh brother! One of those people who claim that all taxation is theft has wondered onto Massimo's Rationally Speaking.

    In their world, there are only productive individuals and parasites who live off of taxes.

    These productive individuals somehow miracously succeed exclusivly to their own efforts, they are not educated in schools, do not use critical infrastructure, and have no mutually dependent relations with anybody. If you don't know any of these superhuman individualists, there is a good reason, they can only be found in the fiction of Ayn Rand, and others like her.

  4. No, Mike, property is theft.
    Krapotkin said so, so it must be true...

  5. "taxation is theft. there is no such thing as a fair tax."

    There are functions that just can't be done efficiently on an individual basis. Most utilities (water, sewer), other infrastructure such as roads, police service, fire protection, education (although the so-called upper crust would like to abolish public education which would further solidify their control of society) and on a national level, national security (albeit the current regime has totally bollixed that up).

    There are a lot of inefficiencies, and corruptionin the taxation system, but perhaps it would be better to work at eliminating them than abolish, and risk total anarchy as people try to fend for themselves.

  6. Taxation is the price we pay for civilization. As Sheldon and Dennis have already pointed out, basic infrastructure is more efficiently maintained via collective public funding and action, rather than depending on the whims of moneyed individuals who may or may not feel generous that particular day. Membership in the Civilization Club is paid for through the dues of taxation.

  7. "In other words, at least at the level of brain function, there is no reason why we couldn't work toward a better society where people are fairly taxed to further the public good and at the same time they are encouraged through incentives to give money to charities."

    What social secularists obviously have against funds coming thro charities is that they are more likely to be faith based.

    If a person should acquire funds that come from an impersonal , non-judgmental source, that is not a particularly desirable avenue of distribution. In all other areas of life, we appreciate and practically demand good critical thinking type judgment/skills, why would we not we care more about the poor and underprivileged in this regard? Don't you think that they too should understand that the funds that they receive cost someone something? In Mexico, for example, we don't even just give away beans to the mountain people. The men work somehow to get the food. If you don't have them work for the extras, they won't even respect you at all. People in other countries/ cultures are apparently smarter and more sophisticated that way...

    When the method of delivery is impersonal, the fact that the commodities cost someone else something is virtually lost.


  8. Cal:

    One of the reasons I would prefer not to depend on religious organizations to provide services to the needy is because of the potential for their faith to subvert their charity.

    For instance, while I was in Guatemala adopting my daughter I had the opportunity to travel into the mountains and visit a minister and physician who maintains a clinic for the poverty-stricken indigenous population. My wife and I were arranging to have medical supplies delivered to the clinic (all free, of course, and despite the fact that I am a "militant atheist" : ) ), and during out conversation, he informed us that he had been unable to secure any funding or contributions from the Southern Baptists, despite the fact he was a member of that religious group. When I asked him why, he told me it was because he refused to comply with the organization's demand that he try to convert the Mayan people while seeing to their physical needs. Because this man did not put evangelism before charity, he was denied support from his own church.

    Personally, I would rather depend on the inefficient but non-judgmental public assistance than on the subjective and arbitrary decisions of the private philanthropist.

  9. I do not share Mikes extreem view that taxation is just theft. Obviously there must be taxation to run any society. Nor am I completely agains helping the less fortunate through tax dollars. So long as the said program is inventive and designed to be an interm program (with obvious exceptions such as blind and so forth), even then programs can be creative.
    My point is that M (and many others) think that increased tax rates will somehow fix social issues. Where he can't get over the simple fact that increased tax rates do not nessisarily mean increased tax revenue for the state, and usually mean the opposite (depending on the origonal rate). There is actually an ideal tax rate that will collect the most income, that rate fluctuates with changing economic factors. Many times tax cuts will achieve higher tax revenues (again depending on the origonal rate and many other economic factors). Even if those tax cuts come from rich. It is very short sighted to think that the answer to social problems is to make the wealthy pay for them. Trust me, I see the appeal of the idea that the rich should pay for the less fortunate, if it would truely work I would be all for it, but the reality is that it does not work. The best answer for raising funds for social programs is to insure overall economic health of your society. Not only will you have less needy to begin with, but the most possible funds to help them.

  10. Robert,

    That is so cool that you went to Guat. to adopt and that you shared your resources. You will be so glad you did!! And yes, of course religious orgs do have their politics to overcome too.

    My sis has adopted from their also. The oldest of her kids are now in their early twenties. We are quite proud of them and love them both very much.

    She has turned her energies now to heading up an org she and her hub founded which feeds about 2000 children a week. Use to be called the "milk ministry" because at first all they could offer was milk. Now they are able to give a highly fortified cereal and milk.

    The motto or verse for the org is simply:
    "Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress and to keep oneself from being polluted by the world." James 1:27

    In this verse it does not imply that to look after widows and orphans one must make proselytization the total aim. It only says to "look after". We let and the individual families and children make their own decisions on what they will choose for their beliefs.

    Also, my sis, her husband and I and mine work on a separate project that helps the various churches in guat. unite and work together for the best interest of the children.

    Defeating church politics, one individual at a time....


  11. I agree that taxation is theft. It's hard to deny it. But it's theft that's entirely justified for all the reasons above.


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