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Chapter 1
1.2. Social preferences, or how rational and self-optimizing agents reveal their social sentiment Social norms, arrangements, and institutions play a vital role in a society’s self-regulating mechanism, thus being consistently addressed in this work. However, as discussed in the further parts of this chapter, there is no place for social norms under the reductionist neoclassical research program. Pro-social behaviour is analysed as the outcome of a conscious self-optimization process. In other words, any kind of pro-social behaviour (voluntary giving, or altruism, is discussed most frequently) is assumed to arise from the features of individual preferences (inequality aversion, fairness considerations, “warm glow of giving”, etc.). This section provides a brief overview of the most influential studies dealing with the phenomenon of voluntary giving and designed under the neoclassical research program in order to illustrate the aforementioned argument. Becker (1974) formulates the principle which has been serving as a theoretical ground for analysing altruistic behaviour under the orthodox framework up to modern times. The aforementioned principle implies that, for any individual, the utility can be described as the function of an individual’s endowment/consumption as well as the level of utility of other individuals13. Formally speaking, Becker (1976, p. 819) describes the utility of the “representative agent” in the following way: Uh = Uh (X h , X i ) where Uh stands for the level of utility of the agent h; Xh stands for the consumption of the agent h; Xi stands for the consumption of the agent i. Becker (1981, p. 1) amends the hypothetical utility function incrementally, keeping that = Uh U(Z 1h ,… , Z mh , ψ(Uw )) where Uh stands for the level of utility of the agent h; U stands for the utility function of the agent h; see the difference between Nash (equality in terms of utility), Rawlsian (satisfying the needs of the most deprived agents), and utilitarian (maximizing aggregate social utility) mechanism of social distribution. However, all the aforementioned mechanisms concentrate on the outcome, i.e., final distribution of the social good among the agents. Consequently, they correspond to the idea of distributive justice (for a more detailed discussion, see Okhrimenko, 2021). 13 Becker (1981) discussed family members. Perhaps, the author meant the relatively small social group with strong emotional ties between its members.
