One of the more depressing implications of careful economic analysis is that it is very difficult to actually give away money in ways that actually benefit the people toward whom we are trying to be charitable. The law of supply is pretty robust here: if we effectively pay people to do something (stand in line for a handout), we will get more of that something (more people standing in line for a handout). You see it every Thanksgiving and Christmas: people lined up for blocks waiting for $0 food, clothing, shelter, toys, etc. The problem is that their time is valuable, and under the right conditions the full value of charitable endeavor will evaporate in the form of people wasting their time waiting around for stuff. Tim Shaughnessy and I discussed this a couple of years ago, and I offered a few pointers (inspired by Tyler Cowen’s Discover Your Inner Economist) for Lifehack.org early last year. David Zetland applies similar insights to aid here.
So here are a couple of questions. I’m participating in the Memphis Foundation Fighting Blindness VisionWalk, and I just signed up for a charity 5k on November 13. What exactly is accomplished by all of this? If direct handouts lead to wasteful rent-seeking and line-standing, what happens when the charitable endeavor is tied to consumption goods and social capital-building activities like walk-a-thons and 5ks? I look forward to comments and will blog my thoughts later this week. And I’ll post a picture of me finishing the 2009 Mike Cody 4-Mile in my Mises Institute “Stabilization is Chaos” long-sleeve shirt, if I can find it.
