Charity, and Why We’re Bad at It

Over at the Freakonomics blog, Daniel Hamermesh explores how a volunteer group he was a part of discovered by trial and error who was best at what tasks. They then specialized in these tasks to more quickly complete the project, which was to remove an invasive species from the sea off the coast of Maui. As an economist, he should have known better. Manual labor is clearly not his comparative advantage; if he really wanted to help prevent invasive species, he could have taught more classes or given paid lectures. He could have then given money to an NGO that works to prevent the spread of invasive species, or hired out some day-laborers to work in his stead.

This is a problem with charity work that I have more generally – I don’t think most people are very interested in the actual charity itself, but rather in signaling our generosity to others and feeling like we’ve completed our moral duties. I would define signaling as “public actions and signs specifically designed to convince other people that we possess desirable traits or status”. This is one reason why a charity like Habitat for Humanity is popular; it both signals our willingness to perform charity, and gives us a sense of accomplishment. At face value, it doesn’t make a lot of sense to fly somewhere to build houses; not only is this an inefficient use of resources (how many high-schoolers are training carpenters?), but it also lowers employment for laborers in the community that they are trying to help. But the sense of accomplishing something very concrete, as opposed to the more abstract notion of paying someone to do something, is much more rewarding. Adding in the benefits of travel, the whole practice seems to be more about creating a fun and eye-opening experience for the workers, as opposed to helping the needy as much (and efficiently) as possible. Now this isn’t to say that Habitat for Humanity is not worth doing, just that its not the best way of helping people.

One counter-argument is that it is almost impossible to know the most efficient way of helping others, and that furthermore this rests on a moral assertion of who is most in need and what they are in need of. But we cannot let the perfect be the enemy of the good; inaction (or grossly inefficient action) is much worse than what we can hope to do if we just put a little thought into it. Daniel Akst lists some of the options for us, and I tentatively agree with his conclusion that micro-lending is the best way to go. Not only is it a direct connection to people in need, it also has spill-over benefits associated with enabling entrepreneurs in low-income nations. Another option is to join Bill Easterly in demanding that aid organizations become more accountable and transparent in how they spend their money. But this assumes that on average people care a lot more about how effective their charitable donations are than how other people perceive their giving. You might call me cynical, but I think that our revealed preferences (i.e. how inefficient our charitable giving is) shows that this is sadly not the case.

-dp

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~ by danplechaty on January 12, 2010.

2 Responses to “Charity, and Why We’re Bad at It”

  1. is it me or is it hard to read the type and the black background?

  2. […] Accidents and Growth One of the objections to my previous post on charity was that often we don’t know the best way we could be helping people. I still believe that in […]

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