Altruism in the Economic Evaluation of Credit Unions: a Thought Piece

Kevin M G Hannafin and Donal G McKillop

The assumption that individuals are self-interested by nature, or even opportunistic, has been consistently applied in the economic evaluation of credit unions. However, the history of the credit union movement exemplifies these institutions as important instruments for combating misery, usury, famine and unemployment. This combined with their enviable track record in mobilising voluntary support and their co‑operative philosophy of equality, equity and mutual self-help might suggest that the behavioural assumption of self-interest is inappropriate to these institutions. Or, at least, that the propensity to be unselfish (altruistic) should be incorporated into economic models of their behaviour. Against this backdrop, this article, which is designed to be thought provoking rather than definitive, considers the concept of altruism and argues that enlightened self-interest may be more usefully applied to the study of credit unions. Two examples are used to support this argument; one considers why credit unions might charge sympathetic loan rates or adopt a neutral stance in their rate setting behaviour, and the other considers why people might choose to volunteer in credit unions.