Should we give people prizes for helping the poor? Robin Hanson thinks so:
Organized charities (especially government ones) spend a large fraction of their income on administration and still suffer relatively poor information regarding who is worthy of what charity. The most effective charity is often one on one, one charitable person helping one person in need they have met through some ordinary social context. Such personal charity is more likely to offer the kind and amount of aid needed, and to satisfy the emotional needs of both parties. The problem is, charity money often comes concentrated from taxes or a few rich donors.
My solution idea comes from the Bible, which tries to convince its readers that they should be kind to strangers in need, because they might be angels in disguise come to test their charity. (Paul said "be ye not fearful to entertain strangers, for some have entertained angels unawares".) What if concentrated charities funded "angels" to go around acting like they are in need of help, noting who helped them the most, and then giving those people large publicized rewards later, say in a couple of years? The help offered could range from giving directions to offering a job.
Those rewards, and the publicity that goes with them, might induce people to try to help folks they meet more often, so that they might win this "charity lottery". The percentage of administrative costs might be lowered by offering large rewards relative to the wages of the angel.
Prizes tend to induce the appropriate effort when the desired result is well-specified in advance; this condition appears to be satisfied in this case. But if I was poor, would I rather just receive the funds directly, in lieu of seeing a prize for helping me? (If you think that Robin deserves the prize of tenure, as I do, we should be giving prizes to people for thinking of prizes for those aiding the poor..and perhaps I should get a prize for voting for him…)
The prize competition is better for the poor if you can get people to compete very intensely for the prizes, perhaps in negative-sum fashion. Good samaritans might treat the game as a fun lottery, thereby spending more resources than the government has pledged in the first place. Alternatively, the prize system may mobilize decentralized information better than a simple government cash drop.
The bottom line:
We don’t spend nearly enough time trying to figure out how to help the poor. Here is Robin’s full argument.