Ethical choices in the economic world

A revised model of the preference function is presented incorporating utility maximizing acts of material self-sacrifice. This model incorporates neoclassical and behavioural arguments, allowing for the stylized fact that economic agents are motivated by both material and non-material incentives. Given such a preference function, choice behaviour is modelled as a function of relative opportunity costs (price) and real income. Preferences are determined by a variety of variables inclusive of social capital and education. There is, therefore, a core preference based upon non-economic variables and a ‘marginal’ component which is a function of conventional economic variables. The relative importance of these two components in determining choice behaviour is an empirical question. Building upon conventional tools, a demand curve for moral acts is derived and underlying income and substitution effects discussed. Empirical evidence from the tipping literature is used to illustrate the model.