Scarcity, choice and opportunity cost: a reality from which we cannot escape.
Every family faces a restriction at a certain time or period. Your income, regardless of the source (wages, dividends, transfers, interest, etc.), is given. This restriction faces an unlimited universe of needs that would like to be satisfied, so the members of the household have to choose which needs and with what intensity they are going to be satisfied and, since income is limited, there will be some needs that will be sacrificed to the cannot be satisfied. Choosing how to allocate a scarce resource, in this case family income, always carries an opportunity cost: the benefit that we would have obtained if we had allocated part of the income to satisfy the second best option.
In the allocation of income within the home there are always selfish and altruistic actions, highlighting within the latter the part of the income that parents allocate to their children on food, health, education and clothing in a process that is actually investing in their human capital and they aspire that this investment results in that when they are the same age as their parents now, their level of well-being is higher.
Given that parents derive satisfaction from the well-being of their children, this attitude can be characterized as selfish-altruistic, selfish because parents derive satisfaction from their actions, and altruistic because they do not expect their children to pay them in the future for the resources they received. Obviously, allocating scarce resources to children implies incurring an opportunity cost since the parents could have used those same resources to satisfy their own needs.
Outside the home, other types of acts are also observed that can be characterized as selfish-altruistic, such as helping a person to cross a street so that they do not run over them. The person giving the aid derives satisfaction from his altruistic act and does not expect any retribution in return; not being run over is enough. Another example is buying tacos for a hungry homeless child; he derives satisfaction from his action and expects no greater reward than the child’s smile and knowing that he was fed.
Let us now turn to individual donations to civil society organizations (CSOs) that perform some function that can be characterized as altruistic, be it in education, health, culture, etc. and that complement or in the extreme case are substitutes for government actions in these areas. These non-profit organizations obtain their financing through donations made by a group of individuals and it is an efficient mechanism that centralizes in each organization the actions that each of the donors in particular could not carry out; there is an individual and social gain from this centralization.
When an individual decides to donate a portion of their income to one of these organizations, it reflects, in the first place, their preferences about which activity they want to support. Your donation, however, is not an act of pure altruism. The individual expects that the organization to which he made the donation, with the opportunity cost that this implies, will efficiently, effectively and transparently comply with its objective and the only thing he expects to receive in return is that the objectives were met and the subjects object of the aid provided increased their level of well-being. He does not expect greater retribution from his altruism than to generate well-being for himself by knowing that he has helped someone in need. Donating to a CSO is a selfish-altruistic act.
Due to the above, and given the controversy unleashed by the tax limit on deductions for donations, there should be no tax benefit for donors. If you, dear reader, wish to donate to a CSO it is because you derive satisfaction from their act; do not wait and even less demand more.
Twitter: @econoclasta
Economist and professor
Point of view
Knight of the National Order of Merit of the French Republic. Professional Merit Medal, Ex-ITAM.
Reference-www.eleconomista.com.mx