The Giver Paradox

Norwegians are apparently a generous people! We pay a huge proportion of our income in taxes to fund the world's most generous welfare state.

Sharing with the neediest can therefore be said to be a fundamental Norwegian value! But why don't we do more for those who really need it?

What about the world's 700 million extremely poor, or the tens of millions of refugees displaced from their own countries? Or future generations who will be affected by our climate emissions, and Ukrainians fighting for control of their own country? Aren't we generous after all

The war in Ukraine puts Norwegian pettiness at the forefront. Norway has already earned much more than thousand billions on the war in extraordinary oil and gas revenues. Nevertheless, the government will not give more than NOK 30 billion annually to help Ukrainians defend themselves.

Climate policy is no better. We have an oil wealth of NOK 20,000 billion. Some of it could have been used to support countries that want to transition to a fossil-free society, or that are affected by the consequences of our fossil use. But what does the government do? It sets off cormorant 14 billion; less than a third of what we spend on subsidies for Norwegian electric car buyers.

What explains that otherwise generous Norwegians are so stingy with people outside their borders? Is it because we only like to help Norwegians? I don't think so. We are not particularly good at helping Norwegians either, unless it happens over the tax bill. It will be most obvious this Christmas.

Christmas is said to be a time for charity. Yet, on average, each of us gives no more than NOK 50 to charities and other good causes. In comparison, we are expected to spend on average NOK 25,000 on Christmas shopping. In total, Norwegians spend a staggering NOK 140 billion on food, drinks and gifts.

A better explanation for why we do so little for people outside our borders is that we primarily help when we think it benefits ourselves. But doesn't this stand in contrast to Norwegians' willingness to pay for the world's most generous welfare state?

The truth is that the Norwegian welfare state has become so generous because it takes advantage of the fact that we like to help ourselves. In welfare state research, this is known as ”the redistribution paradox“.

You would think that the most effective way to help those who have the least is to target the aid to the poorest. But when researchers look at how welfare states affect income distribution, the result is surprising. It turns out that welfare states that help entire the population, and not just the most needy, ends up giving more also to those who have the least.

This is because universal welfare states, such as the Norwegian one, take advantage of the fact that we have greater donor pleasure when we know that we are helping ourselves. The Norwegian welfare state is not primarily a solidarity transfer from rich to poor, but a social insurance scheme that helps the steady taxpayer.

The welfare state insures against life's misfortunes, such as the need for health care and income in case of illness, and equalizes income throughout the course of life. Subsidized daycare and education is a “loan” while we're young, which we pay back in taxes when we get older. In addition, health, education and income protection are a good investment in the income and tax ability of others, which allows us to have better private and public services.

Anyone who wants to change society in a more solidary direction must learn from the secret of the welfare state; that enlightened self-interest does more for the needy than altruism when put into system.

Several of my colleagues, and myself, belong to a small minority of Norwegians who have pledged to give at least 10 percent of their gross income for effective assistance purposes for the rest of their lives. We believe in giving and giving provide effectively, even if others do not give and we do not get anything back.

We are not alone. Several hundred, if not thousands, of Norwegians do the same. But if we're going to make a real difference, we need contributions from millions, not thousands. And then it does not have to appeal to the love of the needy. We must learn from the welfare state and build institutions that are in line with the enlightened self-interest and through that help those who need it most.

One example is pandemic safety. In a recent report from the Lancet, featured by Stoltenberg Committee on Global Health, it is established that there is about a quarter chance that in ten years we will experience a new pandemic with more deaths than covid-19. The best prevention is to support initiatives such as Gavi and CEPI, which develop and distribute vaccines, as well as initiatives that monitor virus cases in poorer countries where a new pandemic is likely to occur.

On climate, too, we can think win-win. For too long we have been running a form of self-flagellation around climate change. We are told that we must make great sacrifices for the generations of the future. But no one likes having to sacrifice themselves for people they will never meet. It's no wonder we're struggling to cut emissions.

A kinder egg that draws on the enlightened self-interest is climate finance in poorer countries. It provides greater emissions for the money, while not having to cost us a penny. This is how we help slow global warming, which is in our self-interest, while at the same time we can increase welfare levels in poorer countries. Through greater emissions cuts abroad, we can also defend less drastic measures here at home.

If Norwegians are to give more of their exceptional wealth, they must see that they get something in return for it. It is the enlightened self-interest that reigns, when the will of giving is to be decided.