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behavioral economics

Rationalizing the “Irrational”

Image of smoldering, smoky cigarette butts in an ashtray

Economists are famous for attempting to rationalize seemingly irrational behavior. One of the more extraordinary is Gary Becker and Kevin Murphy’s theory of rational addiction, in which they hypothesized that addicts plan their consumption of addictive goods. When deciding whether to smoke a cigarette or take a hit, the theory goes, addicts choose in full knowledge and consideration of the health costs and the future costs of their smoking or drug use due to addiction.

Does being wealthy make you more charitable?

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By Ashley Whillans

Each year, the average American family donates approximately 3.4 percent of its discretionary income to charity. Most of these charitable contributions are made from October to December, known as the “giving season” in the nonprofit sector.

So what inspires individuals to donate to charity?