New A Level
Economics
Behavioural
Economics
Resources for Courses
The Importance of Al truism
Resources for Courses
Teacher Instructions
Saudi Arabian Prince Alwaleed bin Talal to donate his £20bn personal fortune to
charity.
In June 2015, Saudi Arabian Prince Alwaleed bin Talal said he will donate his £20bn
personal fortune to charity. The 60 year old nephew of the Saudi Arabian King
Salman is said to be the 34th richest person in the world (according to Forbes).
The money donated is to be used to "foster cultural understanding", "empower
women", and "provide vital disaster relief", alongside other areas the Prince wishes
to get involved with. He is also noted as saying that his philanthropy is an intrinsic
part of his Islamic faith.
The Prince has said that he has been inspired Bill Gates and the Gates Foundation.
Gates is the former CEO of Microsoft who personal fortune, grossed through business
interests is often quoted as making him the wealthiest person in the world. The
Foundation is said to be the world’s wealthiest charitable foundation – donating billions
of USD to many causes including the promotion of health in poorer African nations.
Altruism (the principle or practice of concern for the welfare of others) is an important
concept when looking at behavioural economics. It challenges traditional theory that
consumers are rational and only consider personal utility when making consumption
decisions. Altruists or ‘philanthropists’ can often act in a way that has great personal
cost.
Altruism suggests that there are other motivations that exist for people, including a
desire to help others through charitable donations of money or time. The concept is
not only applied to the ‘super’ rich like Gates or Prince Alwaleed, as many people of
varying levels of wealth regularly give money or gifts to charity.
The drive to be altruistic may be cultural or religious. Some people are driven by a
need to be respected by society, others by a desire to see justice for those who have
been unlucky or unfairly treated.
Slice of the pie!
Imagine that you had a £20bn pot of money that you wished to donate to charities
and causes of your choice.
What would they be and why?
Using the ‘donut’ diagram below, divide the middle ‘grey’ ring into sections. Within
the sections state how you would use the £20bn for altruistic purposes. You can divide
the ring into equal sections or unequal sections if you would like to donate to some
causes or charities more than others.
In the outer ring, explain why you would like to donate to the individual charities or
causes that you have stated.
Another slice of the pie!
Let’s do the exercise again! This time, imagine that your earnings are fairly average –
let’s imagine that your annual income is approximately £30,000 and that you have no
major assets that you can gift.
Now how much of your income would you be prepared to donate and for what reasons.
Again, divide the middle (grey) donate into sections to show causes or charities that
you would donate towards. Try and put an actual amount (e.g. £100 p.a.) and say why.
How has having a smaller income and amount to donate altered the way that you
went about deciding to be altruistic? Does your altruistic behaviour alter with having
more money to give?