The economics of street charity

Freakonomics/NYT holds a symposium, including me, Nassim Taleb, Barbara Ehrenreich, Arthur Brooks, and Mark Cuban, with guest comments from Roland Fryer and Stephen Dubner.  My first sentence:

I’m not keen on giving money to the beggar.

Here is another bit of mine:

Oddly, the case for giving to the beggar may be stronger if he is an alcoholic.  Alcoholism increases the chance that he is asking for the money randomly, rather than pursuing some well-calculated strategy of wastefully investing resources into begging.  But in that case, I expect the gift will be squandered on booze, so I still don’t want to give him the money.


You could always carry small bags of nonperishable food that requires no preparation for such purposes. That is what my wife and I do when we're downtown or in other areas where transients are frequent. Sometimes, the bags also contain a 'prize', typically either a 50 cent Bible or a similarly priced piece of literature.

I have no problems giving a beggar some money. He'll probably spend it on the same thing I will if I am in a place with beggars. Mcdonalds and booze. Besides, it makes me feel better about myself and I find utility in that.

The Barbara Ehinreich response is a joke right? Nobody knows how to suck the air out a room better than that woman.

We're in one of the richest countries in the world,
but the minimum wage is lower than it was thirty five years ago.
There are homeless people everywhere.
This homeless guy asked me for money the other day.
I was about to give it to him and then I thought he was going to use it on drugs or alcohol.
And then I thought, that's what I'm going to use it on.
Why am I judging this poor bastard.
People love to judge homeless guys. Like if you give them money they're just going to waste it.
Well, he lives in a box, what do you want him to do? Save it up and buy a wall unit?
Take a little run to the store for a throw rug and a CD rack? He's homeless.
I walked behind this guy the other day.
A homeless guy asked him for money.
He looks right at the homeless guy and says why don't you go get a job you bum.
People always say that to homeless guys like it is so easy.
This homeless guy was wearing his underwear outside his pants.
Outside his pants. I'm guessing his resume isn't all up to date.
I'm predicting some problems during the interview process.
I'm pretty sure even McDonalds has a "underwear goes inside the pants" policy.
Not that they enforce it really strictly, but technically I'm sure it is on the books.

Hysterical and insightful.

Dear Tyler:

Maybe, as an NYT columnist, you have some inside info on whether the NYT is ever going to report upon the rather humiliating "letter of clarification" that their star new blogger just released to settle the second half of John Lott's defamation suit against Levitt? You can read Levitt's letter of clarification here:

The NYT's reluctance to report bad news about their blogger/columnist (which they also displayed in 2005 when the WSJ and the Economist, but not the NYT, reported Foote & Goetz's discovery that Levitt's famous abortion-cut-crime theory was based on two technical mistakes) might be an interesting topic for you to analyze using sophisticated economic concepts such as "self-interest."

"I'm not keen on giving money to the beggar."
I couldn't stop laughing when I read that for the first time.

My wife once tried to rent a room for a homeless woman. The woman would not accept because she was afraid of the pesticides that they use in motel rooms. It is not easy to help the homeless. They often have mental illnesses. Fortunately in our area there is a homeless ministry that most of the local churches support and they have psychiatrists who volunteer and they distribute meds for mental illness. I give to that ministry rather than directly to the homeless.

Robin Hanson has an interesting proposal to alter the incentive structure of these situations. He calls it, "Charity Angels."In ancient mythologies, including the Bible, gods would often wander the earth dressed as beggers. Sometimes they would be travellers looking for a place to stay. Whoever took care of these gods, even though they looked like beggers, was handsomely rewarded. So, according to Hanson, here’s what we do. We pick a group of homeless beggers and designate them “angels.† If some enterprising person takes one of these angels in, and nourishes them back to health, gets them on their feet, or brings them to some generally agreed upon standard, then that person is rewarded with, say, $10,000,000. Now the whole point is the public doesn’t know who the angels are. So now they have an incentive to help beggers, in the hope that the one they’ve chosen turns out to be the angel.

What standards do you think we'd have to set for this to work? And how much money would you have to offer?

I'll sometimes give beggars a bit of cash. I don't factor in whether they're going to spend it on alcohol much - if they're hungry, I assume they'll buy the food first and the alcohol with any remaining funds, and if they're self-medicating a mental illness or have a physiological dependence, they may benefit the most on the margin from spending the money on intoxicants. I don't know enough about the beggar's situation to be able to believe that I can make better choices.

The main factor for me is how I'm being begged - polite beggars are more likely to get money from me. Aggressive begging is unpleasant to be on the recieving end of and consequently more likely to result in the beggar attracting negative attention from the police or spill over into political support for measure that make life even more difficult for the homeless (such as attempts to ban distributing food to the homeless in public parks). As a beggee, I probably can't influence deep seated behaviors like substance abuse problems, but I can encourage less socially corrosive forms of begging.

You know, if you boil it down to substance, I actually like Taleb's answer best. But God, could he be any more of a d*ck about it?

Martin Gerson wrote:"I don't give to beggars because I feel it creates positive reinforcement that begging works. What I don't understand is the aggressive attitude people adopt once they don't get what they want from you."

It is interesting that Gerson uses the term "positive reinforcement." The term comes from B. F. Skinner's writings on psychology, education and conditioning. Gerson's use of the term implies that he sees himself in relation to the beggar as an educator using a notoriously manipulative pedagogical method. If the beggar percieves this I would say that his aggression is very understandable (if not in his own self-interest).

Taleb makes pretty much the same mistake. He answers the question thinking only of his own totally arbitrary emotional motivations. Um, fantastic, now why not try thinking about whether or not giving to street beggars actually improves the lives of street beggars or if it ends up hurting more people on average? Then the next time someone asks you for money, your decision won't be based on meaningless, self-centered criteria - like whether or not you saw Sally Struthers on TV that day - but on steady logical principles.

Those principles might be flawed, but at least it will stop you from acting arbitrarily on your impulses like an animal.

I also was appalled at Taleb's complete nastiness and lack of professionalism. I liked Fooled by Randomness, and his attitude doesn't change that, but man, what a jerk!

I'd appreciate your take on Muhammad Yunus' loans to beggars through the Grameen Bank.

once a beggar reach my uncle´s house.He said i will pay you for working in the lawn.His answer: I asked money not work

As a Texan, I drive a lot. Very frequently I encounter homeless men and women panhandling at busy intersections in Austin. I often give them money, but only if I think their sign is worth buying. In essence, I turn panhandling into a transaction. As you might imagine, I now have in the back of my car evidence for the basis of some sad grad student's sociology dissertation. Someday I might damn well turn it into a contemporary art exhibit, thus taking the straw of the begging class and turning it into the gold of the creative class. Christ, one hundred and ten posts, and not a single effort to exploit these cheap laborers!

Perhaps money for a drink will speed the alcoholic beggar along to the point where he will choose to get sober? Or perhaps he'll just drink himself to death, and your money may have allowed him to numb the pain he feels from living?

I feel that I should devote as much my money to myself at this point in my life given the amount of money I'm borrowing to pay for school. Perhaps I can afford to be more generous in the future. I agree that giving to beggars encourages begging, though in the US, many of them only have government social security grants to go to, which is also begging in a sense. Some beggars are also sleazy. In my town (Urbana, IL), there are not very many beggars, but one that I talked to while we were both drunk claimed to make about $80/day off of begging, which is much more than I make from honest work. That reduces my desire to give to beggars, at least in this town. Beggars in confusing downtown Atlanta were actually quite helpful, almost professional guides when I visited there. However, the same beggars continued to offer to guide me to the same conference from my hotel every day I was there...

Martin: I once had a beggar ask me for money "for some lunch" outside of a restaurant. I told him that I didn't have anything to give him, went inside, and spent my last $6 I had on me on lunch. When I came out of the restaurant, he started loudly calling me a liar, and using a lot of profanity.

You gotta love the Cuban's and Ehrenreich's responses. Apparently, Mark Cuban doesn't have an inner economist and Ehrenreich believes beggars really can be choosers.

'I do like Jesus' approach to the problem. "If a man asks for your shirt give him your cloak also."'

Yeah, and you saw what happened to him, he got crucified by the authorities.

In sub-saharan Africa, there is an old saying "It takes a village to raise a child." Of course, these are the same countries with high poverty rates, high unemployment, rampant AIDs infection, high levels of corruption, and low GDP growth, so maybe it isn't such a hot idea after all.

Tyler --

Remember those Motel 6 commercials by a guy named Tom Bodett?

Try his book Small Comforts. An interesting look at your topic -- with the wit of Twain.

I'm begging right now for someone to take Taleb's soapbox away.

I never give money to skells. No exceptions.

One issue that has not been touched on that much seems relevant. I never give to beggars who are eligible for non-trivial transfers from the government. This means all beggars in Western Europe and Canada and disabled beggers in the US. Such beggars are playing off of the general ignorance of the middle class about details of the transfer system that they pay for with their tax dollars. Oh, and I never give to goth kids looking to supplement their allowances (a non-trivial fraction of the begging population near universities in my experience.)

On the other hand, I almost always give to street musicians unless they are truly, truly awful, and I will occasionally give to beggars who offer up some clever dialogue. If I am going to encourage begging, I want to encourage begging that also provides positive externalities in some other way.


Interesting piece.

On a side note, while I love Taleb's books, did an economist used to hit him as a child or something? The melodrama of his answer made me laugh. I don't think he seems to understand the idea of a "model".

I want to second several of the comments, especially Matthew's comments just above. I think sometimes people think a beggar is a beggar is a beggar, but each one is different - they're human beings. For example, some are living on the street, some in shelters, and some in apartments. Some have incomes - pensions, social security, etc. Some are hearing voices and for some, begging is essentially their chosen form of work.

There are probably some beggars for whom giving them cash is a good act or at least does no harm, but I think there are some where this is not the case. My own view is that giving an American street person who displays even a hint of aggression (or professionalism) some cash is about as far from giving your cloak to a man asking for a coat as a charitable act can get.

Unlike mike, just above, I don't fault the suburban churches and missions for feeding and housing the street people (what else can you do?), but I think he's right about considering the people who have pay the external costs. Many of whom are other street persons - in street person society the weak are at the mercy of the strong. If Ehrenreich is serious, and not just using this issue to grind her self-superior political axes, I think her statement "if a beggar importunes me directly, I must fork over some money....[as to the beggar's situation in life] what do I care?" is callous and sad.

I don't donate money to any cause. Just clothes to thrift stores in poor areas and my old car to the Salvation Army. I spent some time volunteering for a storefront mission and now have nothing but contempt for homeless people.

I have donated a ton of food to the local homeless shelter, day old bread and packaged cut vegetables. (This is not a figure of speech; they have a scale and receipts show the weight). I give nothing to street beggars. Anyone who holds up a sign saying "Hungry - Please help" who gets angry and hostile when offered food should be prosecuted for fraud.

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