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Earning to Give: Occupational Choice for Effective Altruists

Jonathan Morduch and Ariane Szafarz

No 18-017, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Effective altruists wish to do good while optimizing the social performance they deliver. We apply this principle to the labor market. We determine the optimal occupational choice of a socially motivated worker who has two mutually exclusive options: a job with a for-profit firm and a lower-paid job with a nonprofit. We construct a model in which a worker motivated only by pure altruism will work at a relatively high wage for the for-profit firm and then make charitable contributions to the nonprofit; this represents the “earning to give” option. By contrast, the occupational choice of a worker sensitive to warm glow (“impure altruism”) depends on her income level. While the presence of “warm glow” feelings would seem to clearly benefit charitable organizations, we show that impure altruism can create distortions in labor market choices. In some cases, warm glow feelings may push the worker to take a job with the nonprofit,even when it is not optimal for the nonprofit.

Keywords: altruism; occupation choice; nonprofit; warm glow; social performance; donation (search for similar items in EconPapers)
JEL-codes: J24 L31 J31 D64 J44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm, nep-lma and nep-soc
Date: 2018-04-13
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