Social Responsibility, Human Morality and Public Policy

46 Pages Posted: 9 Jan 2017 Last revised: 16 Jan 2017

See all articles by Sanjit Dhami

Sanjit Dhami

University of Leicester

Ali al-Nowaihi

University of Leicester - Department of Economics

Date Written: December 1, 2016

Abstract

The evidence shows that in many important economic domains, many people are either predisposed to engage in 'socially responsible actions' and/or required by regulations to do so. Examples include pollution abatement activity, behavior in a commons, and contributions to charity. We propose a general framework of analysis for modelling such actions and the role of public policy in encouraging these actions in an equilibrium setting. Multiple equilibria are endemic in these situations. We show that it is possible to conduct interesting and meaningful analysis in the presence of multiple equilibria. We examine the role of optimal public policy such as subsidies, taxes and direct government grants in engineering moves from less to more desirable equilibria. We highlight a new role for leadership contributions in facilitating moves between multiple equilibria. We also conduct a welfare analysis of the optimal mix between private and public actions.

Keywords: Social responsibility; multiple equilibria; optimal mix of public and private social responsibility; subsidies and direct grants; environmental economics, problem of the commons, charitable giving

JEL Classification: D6, H2, H4

Suggested Citation

Dhami, Sanjit and al-Nowaihi, Ali, Social Responsibility, Human Morality and Public Policy (December 1, 2016). Available at SSRN: https://ssrn.com/abstract=2895087 or http://dx.doi.org/10.2139/ssrn.2895087

Sanjit Dhami (Contact Author)

University of Leicester ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

HOME PAGE: http://www2.le.ac.uk/departments/economics/people/sdhami

Ali Al-Nowaihi

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

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