Selfish or selfless? The role of empathy in economics

Abstract

Empathy is a longstanding issue in economics, especially for welfare economics, but one which has faded from the scene in recent years. However, with the rise of neuroeconomics, there is now a renewed interest in this subject. Some economists have even gone so far as to suggest that neuroscientific experiments reveal heterogeneous empathy levels across individuals. If this were the case, this would be in line with economists' usual assumption of stable and given preferences and would greatly facilitate the study of prosocial behaviour with which empathy is often associated. After reviewing some neuroscientific psychological and neuroeconomic evidence on empathy, we will, however, criticize the notion of a given empathy distribution in the population by referring to recent experiments on a public goods game that suggest that, on the contrary, the degree of empathy that individuals exhibit is very much dependent on context and social interaction.

Empathic responses to others’ gains and losses: An electrophysiological investigation

“…As a social creature, we are not only able to infer the intention of others' behavior, but our capability of empathy also lets us share the mental and emotional states of others (de Vignemont and Singer, 2006;Decety and Lamm, 2006;Frith and Singer, 2008;Hein and Singer, 2008;Kirman and Teschl, 2010;Singer, 2006;Singer and Lamm, 2009). A large literature of published empirical investigations is probing the neural mechanism of empathy (Singer and Lamm, 2009), most of which used the perception of concrete negative emotions.…”

The ironic effect of financial incentive on empathic accuracy

“…Furthermore, such an understanding would contribute to broader theories of both money as a psychological construct (e.g., Furnham & Argyle, 1998;Lea & Webley, 2006;Lea et al, 1987;Zhou & Gao, 2008) and empathy as an economic one (e.g., Kirman & Teschl, 2010). Although both money and empathy are age-old issues, only recently have researchers began to examine the precise ways in which the one impacts the other.…”

Rationality and emotions

“…They have rightly scented a possibility to explore empathy in greater depth, not only for a better understanding of individual decisionmaking, but also for an explanation of prosocial behaviour. Alan Kirman and Miriam Teschl critically review this literature (Kirman & Teschl 2010) and the claim by some economists that there may be a particular distribution of levels of empathy in society, each individual having his own fixed empathetic capacity, which together with their fixed preferences determine their choice. The authors use evidence from experiments which shows, on the contrary, that, rather than being intrinsic, empathy is dependent on context and the way people interact with each other.…”