The role of altruism in well-being through social interaction, culture, social capital, and institution

The literature on altruism is often quite broad in that it advocates the existence as well as the importance of altruism in economic decisions. However, altruism is unlikely to be included as an important factor in many well-being models. The main thesis advanced in this study is that altruism cannot be excluded from a well-being model, otherwise the model will not be able reflect the actual capability of a society to acquire well-being. Through its ability to both utilise the potential of the resources available and produce positive social externalities, the absence of altruism could undermine the ability of the resources to support the well-being of its members. Our models also include resources, social interaction, culture, social capital, and institution because of their obvious role in influencing well-being. The literature in economics has long acknowledged the importance of these variables in well-being and yet a comprehensive analysis of their inter-relationships in influencing well-being has not been extensively explored. This study may be the first comprehensive inquiry into the inter-relationships among these variables using economics principles. On one hand, the unclear importance of altruism in well-being is caused by the obscure relationship between altruism and transfer behaviour. On the other hand, some altruism models face limitations in their acceptance of the possibility of altruism being extended to people beyond family members. Through mathematical models, this study provides a solution to these problems in two ways. First, inspired by 'Varieties of Altruism' from Phillip Kitcher in 2010, the relationship between psychological and behavioural altruism is precisely defined. Second, the imperfect information assumption is applied in the model. The originality of this study comes mainly from the following areas. First, this dissertation provides a comprehensive analysis showing the mechanism of how altruism influences multidimensional well-being through social interaction, culture, social capital, and institution. Second, the models explain empirical studies by showing that the positive relationship between altruism and well-being is only relevant for people who perceive themselves as having less resource than others. Third, the models show a low behavioural altruism trap, which explains the difficulty in performing a purely altruistic transfer to others. Fourth, an alternative measure for institution is introduced using the reliability and predictability of behaviour. Fifth, an alternative measure for social capital is offered using the coherence of a society as the core definition of social capital. Sixth, the altruism models developed in this study allow a misperception of own and others' resources. Seventh, the models show that the average level of psychological altruism in a society cannot be assumed to be always equal to zero. Eighth, the relationship between psychological and behavioural altruism is explicitly shown in the models.