Is doing a good deed equal to having a good lunch?

摘要

The apparent "irrational" or "non-economical" decisions of those lenders to offer a "below market" rate to their friends or people with charitable affiliations (e.g. membership of non-profit groups) could be analysed using the "bonus utility" concept. The additional utility that they have obtained by "doing a good deed" should be equal to the opportunity cost of giving a lower-than-market rate. For instance, the coefficient of belonging to a non-profit group in our fully-specified model (not shown here) is -0.0168 and this variable is highly significant (p-value = 0.0006). As a conceptual exercise, if we assume that there is only one lender and one borrower, the lender will lose 1.68%. If the loan size is $1000, his "bonus utility" or the economic value of his charity, will be $16.8, cetera paribus. Consequently, "doing a good deed" costs roughly the same as having a lunch in a decent restaurant. (Wine, though would probably not be included.)