What Determines Altruism

(a) What determines the extent of charitable giving among a population of altruists?
Altruism or altruistic behaviour refers to the idea that people care about the wellbeing or welfare of other people in society, and that they are prepared to act in order to help them.   The term derives from the work of Auguste Comte in the 19th Century, and has since been studied in great depth by a number of notable economists who have sought to explain why and how people make charitable donations in the name of altruism in order to help others.
A 1990 US independent sector study found that the act of charitable giving is widespread in the United States, with almost 70 percent of all households making contributions of money and property, which in total exceed 1 percent of GDP.
We can see from these statistics that US citizens donate considerable amounts of money.   The question that economists often ask is what motivates the decision to make these donations, and furthermore what determines the extent of charitable giving by these people?
In order to answer this question we must first of all examine the different models as to why people choose to make charitable donations, and then consider the implications of these models.
Perhaps the most simple and easy to understand model of altruism is the public-good model.   The thought behind this model is that the individual gives to charity because he or she cares about the welfare and wellbeing of others in society.  
Consider a simple example with two individuals in which individual A is a rich person and an altruist, and where individual B is poor.   In this instance the idea of public-good altruism is that individual A cares about individual B’s welfare and general consumption and will make a donation to individual B to help.   Indeed, such is his caring that individual B’s consumption forms part of individual A’s utility function which can therefore be seen to offer positive externality spillover effects.
However, it is...