By-donation economics

When we offer classes or services by donation or with sliding scale prices we are doing something that is not covered by traditional neoclassical Adam Smith-descendent supply and demand economic analysis. By-donation and sliding-scale economics have had barely any economic theory written about them. I’ve never run across it any economic textbooks. That doesn’t mean that we cannot develop more rigorous theoretical basis for them, and it doesn’t mean that they we cannot find interesting mathematical patterns these types of systems.

For instance when by-donation services or classes are offered, the distribution of prices that people pay will form a mathematical pattern Does the distribution of money paid form a Gaussian distribution around a certain price, or is it more of a long tail exponential distribution? How much do these distributions depend on the types of classes or services offered, and how much does it depend on types of demographics being served? The mathematical patterns that appear in the data gives us clues to the underlying economic theoretic structure.

So for instance if you lead a by donation class or offer a by-donation service is the different donations you get more like 0,0,5,5,5,5,10,10,10,10,10,10,10,15,15,15,15,20,20 or more like 0,0,0,0,0,0,5,5,5,5,5,10,10,15,15,20,50,90. The first distribution being more of a Gaussian distribution, and the second distribution being more of a long tail distribution.

For any of you readers out there who offer by donation services and workshops, if you have any data on this of this please write me (and good on ya for offering by donation services 🙂 )

One of the interesting things about by-donation economics is that sometimes there can be a surprise big contribution. A friend of mine who ran a holistic health clinic in a gifting by-donation manner would a lot of low cash contributions and also once in a while get huge anonymous donations. The kind of distribution does not sound like a Gaussian distribution, perhaps it resembles more of a long-tail exponential distribution.


An economic model – whether it be supply and demand or various types of game theories provides a model for where prices and price distributions emerge from the model. One way to tell we are closer to getting a by-donation economic model right, is if the price distributions we get out of the model resemble the distributions we get from real world data.

I’ve written in the past about tweaking game theory models (in one of the paragraphs of this “Narrative and Ontologies” blog, and in the “Emergence,caring,spirit,Darwin,and Adam Smith” blog ) to form new types of models so that they can start including various levels of empathy. It will be interesting if some of these models are useful for analyzing by-donation and sliding scale economic situations.



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