The Rotten Kid Theorem was a situation proposed by economist Gary Becker in order to help explain 'altruistic' behaviors -- although altruistic is an exaggeration here. In the theorem, a selfish actor may be compelled to act in a way that benefits others in order to increase their own future well-being; this general behavior pattern that many of us will recognize as 'enlightened self-interest'.

Becker looked at a hypothetical family with multiple siblings, at least one of whom was a selfish bastard. This one sibling does not care what happens to any other family members except in the case that what happens to them might affect em. This family also has a head, someone who manages family wealth and transfers wealth to other members of the family because e cares about them. This may be a parent giving out an allowance or a parent/grandparent writing a will. Either way, the money received by the various siblings will be determined at least partly based on need. If sibling A wins a scholarship, then the head of the family will recognize that A has less of a need for financial aid, and give some of the money that would have gone to A to B and C instead. Likewise, if C winds up in the hospital, C will receive more money to help pay the doctor bills, and A and B will receive less money.

Even if B is a vicious, self-centered psychopath, e should recognize that is it is in eir best interest to support A and C in any way that makes them richer and doesn't hurt B -- or even, in some cases, to do things that do 'hurt' B, if it means a big enough gain for the family overall. Moreover, B is probably smart enough to keep this thought process a secret, and will behave as if e really does care for his family -- in other words, we cannot really know if a person is thinking this way, in part or in whole. This sort of behavior can be expected without requiring knowledge of a person's mental state.

This 'theorem' is obviously not a big surprise to normal humans, but economists like to have all motives nailed down, and when this was published in 1974 it was a useful addition to models of economic behavior; papers are still being written about this today. Obviously, the general idea can be applied even outside of families; one might do things to benefit one's neighborhood, church, community, state, nation, or species in order to increase future personal gain.

The Rotten Kid Theorem was originally published in A Theory of Social Interactions by Gary S. Becker, Journal of Political Economy, Vol. 82, No. 6 (Nov. - Dec., 1974), pp. 1063-1093. Published by: The University of Chicago Press.

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