2. Altruistic Economics A presentation by Dr. Robin Upton. BRAC University, 2005-03-07 18:00 Available for download at www.altruists.org/ae5 Attribution – NonCommercial - ShareAlike Talk Structure www.altruists.org A Relationship-Based Trading Model

3. Failure. Failure of Classical Assumptions Talk Structure 1. Assumptions of the Market Economy 2. An Alternative Assumption 3. Model Modification 4. Model Developments

4. . i. ‘Perfect’ Information Firstly… i. ‘Perfect’ Information iii. Relationships in the ‘Perfect’ Market Then we consider the nature of 1. Assumptions of the Market Economy ii. Impartial Support Systems

5. Nowadays… i. ‘Perfect’ Information Once upon a time, a long, long time ago, shops were small. How much it cost What the quality was like In the market, everyone knew… Everything that was on sale

6. Nowadays Nowadays … Times have changed

7. Equal Access To Credit? ii. Impartial Support Systems Law Finance A healthy economy requires fair access to other systems, such as:

8. . Equal Charges for Credit? Equal Access to Credit? “ More than ½ the population of the world… do not qualify to take out a loan from a bank … Muhammad Yunus … My vision for the future?… to make credit a human right. ”

9. Equal Charges for Credit? Credit is … Interest… Expensive for the poor. moves money from poor to rich. German Household Groups According to Income Money Movement due to Interest - 1980 Money Movement due to Interest - 2000 PaymentIncome Source: 1980 – A Changing Money System (M. Kennedy) 2000 – Bundesbank figures (H. Creutz). Legal Example

10. We do what we want We are not liable, whatever Click to proceed… Legal Summary Legal Example Agree Consider the typical software EULA… TERMS AND CONDITIONS

11. . iii. The ‘Perfect’ Market Legal Summary lawyers cost a lot of money ! Anyway… money = legal power  So…

12. . Relationships in the Market iii. The ‘Perfect’ Market Modern Economics owes more to mathematics than psychology. The market as modelled is…  not about PEOPLE; all about PRICES. www.paecon.net

13. . Personal Relationships Relationships in The Market ‘Perfect’ market relationships are …  self-interested not altruistic  short-term not long-term  money-centred not people-centred

14. . 1. Market Economy - Summary Personal Relationships ‘Perfect’ personal relationships are … altruistic not self-interested long-term not short-term people-centred not money-centred

15. t. 2. An Alternative Assumption  Some assumptions are outdated 1. Market Economy - Summary  Disharmony between Market & Personal values

16. 2. An Alternative Assumption. Modelling Relationships Classical Economics Altruistic Economics THEORETICAL ASSUMPTIONS PRACTICAL EFFECT Disharmony between Market & Personal Relationships People Care About One Other ? Perfect Information Impartial Support Systems Selfish Individuals

17. Modelling Relationships. Differentiating Relationships 1. Relationships exist between particular individuals … Relationship

18. Differentiating Relationships Sympathy, s 2. Express different types of relationships… …by adding a numerical element.

19. Sympathy, S “Emotional Proximity” ~ s > 0 for Friendships No Love At All Network of Care Love Like Self 0 1

20. Network Of Care. Trading A to B www.altruists.org/355 A B C D S BC S CB S BD S AB S BA 0.25 0.4 AyshaCares for BirbalBirbalCares for everyone else ChristopherCares for BirbalDiptiCares for no one Aysha has a Sympathy of 0.4 for Birbal, so S AB =0.4

21. Trading A to B. Birbal Needs Help! A B CD S BC S CB S BD S AB S BA 0.25 www.altruists.org/355 0.4 AyshaCares for BirbalBirbalCares for everyone else ChristopherCares for BirbalDiptiCares for no one Consider a trade between A & B …

22. Birbal Wants Help! Birbal has a computer problem, so he publishes this fact: Aysha Can Help UserType of Work RequestedRate BComputer Repair He estimates: 1 hour of competent help would save him 6 hours of his own effort.  6

23. Aysha Can Help! Aysha is a computer engineer:. Selfish Transaction Evaluation UserType of Work OfferedRate AComputer Repair She estimates: 1 hour she spends = 1 hour of competent help A B 0.25 0.4

24. Individualistic Evaluation AB 6 Individualistic Transaction Evaluation. NON-Zero Sum System Score using 2 self-evaluated time costs. UserWork OfferedRate AComputer Repair UserWork RequestedRate BComputer Repair6 Individuals’ Scoring is Independent

25. NON-Zero Sum System Zero-Sum System (-1,+6)    Good for Both Bad for Both Good for A, Bad for B A B + + - - Good for B, Bad for A Independent scoring is NON-Zero Sum A+B=0 www.altruists.org/392 0,0

26. Zero Sum System  Money is Zero-sum => (p,-p). Price = Systemic Conflict  * ‘Making money’ is a euphemism; o nly forgers and central banks actually make it … A+B=0    Good for Both Bad for Both Good for A, Bad for B A B + + - - Good for B, Bad for A (-p,p)  No one here ever makes * money…

27. Price = Systemic Conflict . Individualistic Transaction Evaluation Real Value (hidden) Real Cost (hidden) Price P, Splits the benefit A & B. www.ledgerism.net/theInfoGap.htm www.altruists.org/384 A+B=0 B + - - (-1,+6) A + 6 (-p,p) Good for B, Bad for A Benefit for A= P - 1 Benefit for B= 6 - P A & B have directly opposite interests!

28. Individualistic Evaluation AB +6 Individualistic Transaction Evaluation. Altruistic Transaction Evaluation Use of 2 self-evaluated time costs… Removes systemic competition! Use the Network of Care to modify this evaluation.

29. Altruistic Evaluation AB Altruistic Transaction Evaluation. Indirect Sympathy Now apply the sympathy values… Individualistic Evaluation AB +6. 25.4.4 1 1 A B 0.4 0.25 +6 + 0.4x+6 +.25x-1 Altruistic Evaluation AB 1.45.75

30. Indirect Sympathy. 2. Alternative Assumption - Summary Sympathy is not only for one’s own friends … A B 0.4 S BA C 0.3 S CB S AC = S AB x S AC = 0.4 x 0.3 = 0.12 A has indirect sympthy for C:

31. 2. Alternative Assumption - Summary. 3. Model Refinement Publish sympathy for friends. Individualistic Evaluation AB +6 Altruistic Evaluation AB 1.45.75 Before trading: Evaluate trade: Publish offers/requests. A S AB B Use sympathy values to revise Record trade: Publish post hoc feelings. UserWork OfferedRate AComputer Repair UserWork RequestedRate BComputer Repair6 - >

32. 3. Model Refinement Limited Sympathy If you would spend 10 to save someone 50, does that mean you would also spend 1,000 to save them 5,000?. Non-Linear Sympathy There are limits to what we do for others. Sympathy limits reflect that. Could you spend 1Crore to save them 5Crore?

33. Non-Linear Sympathy. Modelling Sympathy Sympathy is not constant Gradient increases with Time Given Gradient = 3 Gradient = 20 People run out of sympathy & get gradually less sympathetic

34. Modelling Sympathy Multiplier = 1/ s Approximate the curve with straight lines: Express the sympathy as Length 5h, gradient 2, so write it (5h 2) Length 5h, gradient 10, so write it (5h 10)

35. Multiplier = 1/ s. Sympathy Vectors A is willing to spend up to 5 hours to save 10 hours for B Hence, sympathy =5 h /10 h = 0.5 We will be looking at 1 / s, which we call the multiplier = 2 in this case

36. Sympathy Vectors. A & B Computer Example Lengths of Time Multipliers 5h 2 5h 10

37. A & B Computer Example. Sympathy as Credit Suppose A cares for B as follows: B gains six hours for every hour of input from A, so the transaction has a multiplier of 6. However, she will not work any more for B, since 6<10, so that a multiplier of 6 is insufficient. A will put in 5 hours of work for B (because 6>2)… UserWork OfferedRate AComputer Repair UserWork RequestedRate BComputer Repair6

38. Sympathy as Credit. Calculation of Indirect Sympathy Increasing multipliers ~ reluctance to work altruistically as input is used up 2h 1 1h 2 2h 3 1h 4 1h 7 1h 10 1h 13 1h 15 Curves can be modelled as closely as is required

39. Calculation Of Indirect Sympathy.Conflation - S ABC 4 A A’s evaluation B’s evaluation 12 B = 24 C. Cheapest Rate (3): Cheapest Rate (2): Cheapest Rate (3): Next Rate (6): Next Rate (4): +24B = 96 C 6 A = 18 B 1 A = +6 B = 12 B

40. Conflation - S ABC. Combination of Multiple Paths A evaluates B evaluates Overall 4 A = 12 B12 B = 24 C 4A=24C 6 A = 18 B18 B = 72 C 6A=72C 1 A = 6 B. 6 B = 24 C 1A=24C 4h 6 6h 12 1h 24 S ABC =

41. Combination of Multiple Paths If A also cares for D, who cares for C… We know S ABC = 4h 6 6h 12 1h 24 Calculate S ADC = 15h 2 2h 5 3h 10 2½h 20. Intelligent Path Choice

42. Intelligent Path Choice 3. Modified Model - Summary A has 2 sympathy paths to C, A B C & A D C: Simply order the different time values by multiplier: The combination, S AC = 15h 2 B D B DDDD BB S AC ‘contains the intelligence’ of alternate paths of sympathy 2h 5 4h 6 3h 10 6h 12 2½h 20 1h 24

43. 3. Modified Model - Summary. 4. Model Developments Conflation:A B C A C Combination:A C A C So, sympathy can be calculated between any 2 nodes on a Network of Care… Sympathy expresses care for particular others. Each relationship has a sympathy vector.

44. 4. Model Developments Recording Work Done Range Of Applications Multiple Currencies Delegated Voting Relationship Credit. Recording Work Done Many Open Areas of Research …

45. Recording Work Done. Swinging of Relationship Credit Scoring would encourage people to give more. Fairness is satisfied if, for any pair of nodes, resource flow from A B is about equal to the flow from B A A B

46. Swinging of Relationship Credit. Range Of Applications Work Balance can be pushed out in either direction… A B 40h 1 20h 2 20h 4 20h 10 8h 20 S AB = Effect of variable multipliers is to restore the equilibrium 40h20h 8h40h 40h 1 20h 2 20h 4 20h 10 8h 20 S BA = 40h 1 20h 2 20h 4 20h 10 8h 20 20h 2 40h 1

47. Range Of Applications. Multiple Currencies Altruistic Economics could apply at many levels. Each node could represent, for example… A person A family An idea A project An NGO A country Different levels could coexist, adding greatly to the power & flexibility of the system.

48. Multiple Currencies. Voting As Currency Users offer whatever currencies they like Users publish personal rates of conversion between different currencies to allow efficient flow between them. Survival of the fittest will decide which are used Patients Treated Meetings Held /Day Staff /PersonDays Volunteer Assistance /PersonDays Taka

49. . Ranking By Relationship Credit Suppose… 1.Everyone receives one unit of a new resource; 2.It can be kept or transferred to others at will; 3.Whoever has the most units of this resource at a set time receives special treatment. This is a delegated voting system Voting as Currency

50. An Altruistic trading system could rank people by contribution made. OffersRequests Robin Upton, +160h –45h, Rate= -0.2 Computer Hardware, Statistics, Foreign Languages, Bangladesh Contacts … Kevin Towell, +14h –3h, Rate= -0.2 Computer Hardware, Motorbike repair, Shop Management, Psychology … James Beckett, +60h –15h, Rate= -0.35 Computer programming, Computer Hardware, Electronics, Internet Advice … Angela Robinson, +550h –175h, Rating= 70h Can you help me with my Laptop? The E-mail is giving me a lot… Mike Channel, +120h –40h, Rate= 10h Help! My scanner doesn’t seem to work. I urgently need it to do a job on Nov. … !! Graham Upton, +3h –2h, Rate= 20h I just can’t get my Wireless LAN working properly. It keeps cutting out, just … Need to Reward Generosity not selfishness… Computer/Hardware/Repair Relationship Credit. Gratuitous Self-Publicity! This would reward altruism by meaning that the most generous people’s requests were met more quickly...

51. Altruistically-Minded others to help program An Internet communication layer necessary to implement Altruistic Economics - www.altruists.org/ae WANTED !!!