Tim Harford, The Undercover Economist, reports:
Rent exhaustion is no economists’ fantasy – go to any place with
rich tourists and poor locals (Dar es Salaam, the first African city I
visited, fits the description nicely), and you’ll see lots of people
waiting for the one generous tip or overpriced taxi fare. If the
tourists become more generous or gullible, the local guides don’t get
richer, they just multiply. The bigger paydays become less frequent.Tyler
Cowen – an economics professor with a popular blog – argues in his
forthcoming book, Discover Your Inner Economist, that for these reasons
you may wish to give money away by wandering around a poor country, far
away from the tourist trail, and handing cash to people who look busy.
Vicious fights over prime begging spots are yet another example of rent exhaustion in this context. If the begging spot is worth say $50 a year, beggars will devote up to $50 a year to keep the spot. Here is my previous post on whether you should give money to beggars.
Yes, but isn’t randomly giving away money a bit risky? Might as well wear a sign that says “Rob me”… Then again, just being a Westerner in a developing country is probably just as risky…
Beggars in trains
Beggars in trains are maximisers.They maximise the number of trains they visit (up and down), maximise the number of bogies they visit etc.There are many beggars who prefer night begging, choosing night trains and if they get a chance will become suitcase lifters.
There exists a train begging mafia also.The mafia boss fixes a fixed target and every beggar has to collect the targetted amount every day.If they collect more the excess is theirs and they can enjoy.If they fail, severe punishment awaits them.Begging industry operating in Railways and elsewhere (yes, there is such an industry) has strong entry barriers, territorial division (beggar A cannot enter the rear side bogies and should visit only front side bogies while beggar B monopolises the rear side bogies etc; beggar A operates between station X and Y and from Y to Z another beggar takes over charge etc.).Begging industry employs all type of beggars-young,old,adolescents,infants …all age groups.There are beggars belonging to different employment status: employers, employees, own account beggars and family workers.
Because of entry barriers even if you pay liberally,new beggars cannot enter.
Economics of begging industry is an interesting subject and why there is no books on this subject? (In an old book store off Brigade Road in Bangalore I saw a 1930s book by J.C.Kumarappa titled “The Beggars Economy of Mysore”).
My concern with giving money to people who aren’t begging is that, in most places poor enough that this is a sensible thing to do, I don’t trust the local rule of law enough to be sure that giving a random Thai kid ten dollars is any better for him than giving him a live cobra; ten dollars is worth beating a local up for (though the wrath of the police when the honour of Thailand is slighted is such that it’s not worth mugging a farang for), and giving a random Thai kid a beating by proxy seems incivil.
>> If the tourists become more generous or gullible, the local guides don’t get richer, they just multiply.
Very interesting.
In Chile I was advised to give food, not money. It works really well, if you are going out, buy a small packet of bread rolls or something (which will cost practically nothing) and offer a roll to each begger.
If they’re hungry they’ll be grateful. If they refuse it, they were not hungry.
I found this worked nicely in Chile, India, China and down town Sydney (except in Sydney, NOBODY was hungry it seemed.)
The poor economic situation of undeveloped countries is unfortunate and nobody wants to have people starving. Therefore, I agree with giving beggars food rather than money as that way you know you helped them and that they won’t misuse the money. Avoiding feeding beggars with their children to send a message that their kids should be in school is a concept since these kids are being used to create more pity on the family of beggars. On the other hand, what if these parents are worried their kids will starve at school. Do these children recieve regular food at school? With so much focus on begging, the tendency of indivduals to be self motivated and find/create work is greatly hindered.
The whole tipping extravaganza does create a surplus of workers in jobs with tipping. They flood the market which can cause standard wages to decrease. in turn, motivation of unemployed workers to obtain a non-tipping job is decreased.
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