Have you noticed that we humans have a deep impulse to sacrifice for no reason?
Unfortunately, this sacrifice impulse intrudes on our economic debates
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“Some authors think that the impulse to sacrifice is the main religious phenomenon. It is a prominent, a universal phenomenon certainly, and lies deeper than any special creed.”
— William James, The Varieties of Religious Experience (1902).
I’m a trained economist. I understand trade-offs.
But where does the impulse to sacrifice for the sack of sacrifice come from?
When I say impulse, I mean the desire to make sacrifices regardless of whether those sacrifices achieve their intended outcome.
The sacrifice impulse is the emotional desire to do something to feel better rather than solve the external problem.
It seems to me that sacrifice is a deep human impulse, and one that religions capitalise on; sacrifice is the morally right thing to do.
But this impulse also intrudes on our ability to debate the merits or otherwise of economic policy choices.
Here are four policy areas where I’ve noticed the sacrifice impulse intrude on the economic and political debate. I then look at a lab experiment on costly sacrifice that shows how easily we are seduced into sacrificing at a pure cost with no benefit.
I’m interested to hear from readers in the comments if they see this impulse in other situations too. Comment below.
1. Environmental policy
Environmental economics is my research background. I studied for a master’s degree in environmental economics and published this paper (free version) about the net effect of a specific type of sacrifice, households going green through conservation activities and spending changes.
Our impulse to do something led to an environmental movement centred on making personal consumption sacrifices, regardless of whether they added up to any benefit or not. I found during my research that because of economic adjustments elsewhere in the economy, individual sacrifices don’t add up. They get offset elsewhere.
Individuals were sacrificing only for feelings, not outcomes.
This impulse intrudes on policies that have low costs and direct effects. Nuclear energy doesn’t come with individual sacrifices. So replacing coal with nuclear doesn’t feel good relative to getting solar panels and an electric car, where there is an element of personal sacrifice involved.
Directly engineering the climate to change the temperature or weather outcomes also fails when it comes to feelings. Can it be that easy? Can good things come without sacrifice?
Solving ocean waste by building ships to physically remove it, or putting physical barriers in stormwater drains, doesn’t feel like a solution because it doesn’t need us to sacrifice. We don’t have to change behaviour, even though quite often these physical interventions themselves lead to beneficial behaviour change—residents see a clean river and are then more careful with their own waste.
I used to think that to improve the environment we must sacrifice. And I thought logic backed up my view. But now I realise it was actually a feeling. A sacrifice impulse. And that this feeling got in the way of logic.
2. Saving and retirement policy
Because saving is a sacrifice, it feels like it must come with a benefit.
At an individual level, saving certainly can help accumulate a buffer stock of funds to smooth out future income and cost risks. But at an aggregate level, saving doesn’t add up.
One of the biggest and most costly policy areas in the country is dominated by the idea that we must sacrifice now to have retirement income insurance. We even call extra payments to superannuation retirement accounts salary sacrificing.
The problem is that we don’t need to do this. Insurance works, and the age pension is a terrific retirement income insurance system. We can simply run an age pension insurance system, funded by the tax system, with no further sacrifices needed.
Yet to satisfy our sacrifice impulse, we spend tens of billions per year to employ 50,000 fund managers to run the world’s most expensive tax-advantaged wealth hoarding system in the form of superannuation.
Check out previous articles on the problems with superannuation:
3. COVID-19 and lockdown policy
Sacrifice was a key ingredient of the COVID-19 policy hysteria. It was many people’s first experience of a society-wide mania that such impulses fuel.
It was a witch hunt on a grand scale for those who did not want to sacrifice.
In the COVID scenario, it was the perception of uncertainty and fear about what we faced that triggered that deep urge to sacrifice. Had we experienced such events before, less uncertainty might have led to cooler heads and subdued those desires.
I would argue that this experience has created some social immunity to the next potential panic over a virus. Having lived through it, most people can now see that we overreacted for no benefit and with huge costs.
Here’s a recap of my experience trying to sense check the actions being taken during COVID that were fuelled by our sacrifice impulse.
4. Inflation
Managing the economy to ensure that inflation does not get out of hand is important. But even in 2024 as inflation has rapidly receded, many economists are still arguing that we must throw hundreds of thousands of Australians (and millions globally) out of their jobs as a sacrifice to the inflation god.
It is bizarre.
This is a slight variation on the theme because usually these economists won’t quit their jobs and spend less to help tackle the inflation problem. They are more like high priests who are leveraging our collective sacrifice impulse to support their policy position. How can we still invest in good things when inflation is above a magic number? Good things must be sacrificed.
An experiment: The Cult of Theoi
Consider this experiment conducted by Paul Frijters, my Nova Academia colleague, along with Juan Barón. They sought insight into questions such as the following.
We take the religious beliefs at face value and wonder what the common economic rationale is, i.e. what would a selfish person need to believe to sacrifice to a deity?
They also note this:
The societal cost of sacrifices is not just the sacrifice itself. The existence of sacrifices attracts religious interpreters who derive influence and wealth from their status as intermediaries between the deity and the agent, which itself can lead to an entrenched religious class
In my view, if your organised religion doesn’t require sacrifice, then your biological sacrifice impulse will find other outlets. So I think there are interesting general lessons here about what conditions lead to us falling back on our sacrifice impulse.
The basic experimental design was a public goods game, where human participants play a computer-based game with others and have the option to contribute to a public pot of money out of their individual account each round.
The trick is that after each round, players receive an equal share of whatever was contributed to the public pot of money, but scaled up. In this case, the value of contributions to the public pot was multiplied by 1.6x and then shared out evenly to all players.
So you can see that there is a potential strategy of contributing nothing to the public pot, then getting your share of what others contribute, enriching yourself at their expense.
The difference in this experiment on sacrifice was that the total payoff was randomised each round so that players couldn’t know how others were contributing. Instead of 1.6x the contributions to the public pot that round, there was randomisation of the payout.
After 20 rounds of standard play, participants were given the option to sacrifice some of their money to a deity to help influence the result each round for another 20 rounds. However, there was absolutely no effect from this. It was a pure sacrifice that cost them but didn’t change the outcome.
It was found that participants gave a whopping 30% of their total income to the deity for the next 20 rounds. It started a bit higher but didn’t fall anywhere near zero.
In another treatment, the game was played with no randomisation and hence no uncertainty, and then the same option to sacrifice to a deity was given. Here, the sacrifice started equally high but dropped quickly as people learnt that there was no result from it.
There were other experimental variations too. In one treatment, the deity was called Theoi, and in another treatment, it was called The Weather. When the diety had a name a much larger sacrifice was made.
When the two ingredients exist of 1) uncertainty, and 2) a named reason for the sacrifice, people will make pure cost sacrifices that soak up a huge share of their income for a long time.
I think this is why there is so much effort from those who benefit from pure cost sacrifices to both maintain a story about risks and uncertainty to generate fear, and to name their deity.
The superannuation diety is the magic of compound interest, and requires sacrifice because of the uncertainty about retirement. Environmentalism has the climate change deity, with a new name of Net Zero, that requires sacrifice because of uncertainty about future weather. COVID had, well, a whole lot of nonsense about transmission, R values, and infection fatality rates, so we sacrificed simply because there was uncertainty about each. Inflation is itself the name of the economic sacrifice diety and it is supported by fears about uncertainty over future prices and the potential loss of value of savings.
You could take a more optimistic view about our evolved sacrifice impulse. If evolution selects for it, maybe it has a functional role. Communities who sacrificed by keeping stores of food, those who sacrificed by not eating cattle, or other such behaviours, could have evolutionary advantage during unexpected variations in weather, wartime, or any such unforeseen scenario. Buffer stocks kept during good times due to our sacrifice impulse can bail out communities in bad times.
The trick, however, is understanding what are true costs and benefits and what are satisfying feelings driven by our impulses.
Yes, the insurance function of our desire to sacrifice can help buffer us from potential extreme events. But we should be able to balance out the value of this function and see whether we are making a pure cost sacrifice over and above any such benefit.
Yes, inflation can lead to large future costs, so spending needs to be spread out over time better. But we should be able to judge if the sacrifice is worth it, or whether it is pure feelings.
The same goes for all other policy areas.
In fact, I think the sacrifice impulse shows how much political systems can degrade before major change arises. During periods of economic decline, we experience falling living standards. But if people are willing to spend a third of their income as a pure cost sacrifice, then perhaps our belief in our politics, the nation-state, and the various institutions in it, will mean we first see these problems as good and necessary sacrifices before realising that change for the better is possible.
But that’s a bit of speculation.
Despite all my criticisms of the particular ways economic analysis is conducted, the fact that economics is based on the premise of assessing costs and benefits is a good thing. When the sacrifice impulse strikes, it forces us to at the very least attempt to identify the costs and benefits and weigh them up.
We must be wary of our sacrifice impulse, both personally and collectively. That goes for economists too.
"But where does the impulse to sacrifice for the sake of sacrifice come from?"
According to the philosopher Tim Dean - How we become human - it stems from a long held religious belief he called "costly signally". Thus the more costly it is to give something up or do something (sacrifice), then the more we are impressed with that faith, which then forms a bond of trust or kinship around that particular faith [pp. 130-32].
Thus, that why I think our belief that somehow we will all becomes greenies or address climate change is somewhat doomed. We humans are not prepared to make these costly sacrifices. We might engage in some form of environmental virtue signaling from time to time, but when it comes to the really hard or costly stuff - then we shirk away from it. One of my political rules of thumb is Green issues predominate when the economy is good, but drop well down the list of concerns when the economy turns bad.
The "impulse to sacrifice" could have four sources:
* a genuine desire to help other people because it feels like the right thing to do
* positive feelings that derive from making an effort to help others in combination with an expectation that helping will make a real difference
* observation of beneficial effects of previous helping activities by self or others, which support the first and second sources
* a desire to be seen to be doing something perceived to be good for others.
In each case, anticipated private benefits would exceed private costs.
In the first, second and third cases, EXPECTED social benefits should exceed social costs. However, helping may sometimes hurt. Those being helped may become dependent on help and/or lose their autonomy. Then, REALISED benefits to recipients may be undermined and helpers may become disillusioned, diminishing social benefits or raising social costs.
In the fourth case, social costs might exceed social benefits, because observers could be upset by the perceived hypocrisy of those attempting to signal their virtue and virtue signallers' own satisfaction may be diminished by their behaviour.
I can't think of cases in which people sacrifice for the sake of sacrifice, except out of fear. However, I don't think that can be called sacrifice or sacrifice for sacrifice's sake.
Unfortunately, because of the public good aspects and free-rider phenomenon associated with tackling wicked problems like climate change, microplastic pollution, traffic congestion, and appalling inequality, there is too little sacrifice to help others from a social perspective.