Michael Munger on Love, Money, Profits, and Non-profits

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4.7 • 4.3K Ratings

🗓️ 19 April 2010

⏱️ 65 minutes

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Summary

Mike Munger of Duke University talks with EconTalk host Russ Roberts about the world of profit, money, love, gifts, and incentives. What motivates people, self-interest or altruism? Both obviously. But how do these forces interact with each other? Does relying on one always provide a stronger incentive than the other? Do charities, for-profit businesses or government agencies do a better job providing a good or service? Munger and Roberts have a wide-ranging discussion across these issues including a section where they discuss whether Christmas gift-giving and gift-giving in general is inefficient.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mail at econtalk.org. We'd
0:33.6	love to hear from you.
0:39.3	Today is April 13, 2010, and my guest today is the great Mike Munger of Duke University. Mike
0:46.2	welcome back to Econ Talk. The great Mike Munger, it's a pleasure to be on Econ Talk again, Russ.
0:52.0	I meant to say the great Duke University. It may really reference their basketball team, but I'll
0:57.2	I'm not there. There's still smoking ruins of what used to be wooden benches here on campus.
1:03.6	There's nothing like youth in its exuberance. What I want to do today, Mike, is pick your brain
1:09.8	about something I've started to think about it, and I think you'll help me think about it or
1:13.5	possibly get me more confused, but I'm pretty confident. Well, you'll help me. I was talking to one of
1:18.5	my students, Michelle McAdoo, and she's working on a project related to profits and non-profits of
1:23.4	their relative performance, and I was trying to help her with the project, and it realized I didn't
1:29.4	really understand distinctions slightly awkward with the professors confused. What I want to do is
1:37.0	talk to you about some of my confusion and what I've thought about since then. I want to start by
1:42.2	ignoring the legal distinction between profit and non-profit. Obviously, there were things that
1:46.6	are classified literally as for-profit, and literally as non-profits in our world, but I really
1:53.6	want to talk about, when I talk about profit versus non-profit, I really want to talk about two
1:58.0	different business models. The first business model uses money to motivate people. It's the
2:05.3	for-profit. The business tries to make as much money as possible for its investors and its owners.
2:12.2	It charges as much as it can, subject to the competition, and pays as little as possible for its
	...

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