Inefficient forms of aid

A group of Occupy Wall Street activists has bought almost $15m of Americans’ personal debt over the last year as part of the Rolling Jubilee project to help people pay off their outstanding credit.

Rolling Jubilee, set up by Occupy’s Strike Debt group following the street protests that swept the world in 2011, launched on 15 November 2012. The group purchases personal debt cheaply from banks before “abolishing” it, freeing individuals from their bills.

By purchasing the debt at knockdown prices the group has managed to free $14,734,569.87 of personal debt, mainly medical debt, spending only $400,000.

There is more here, and here.  One question is how many of these people will go into bankruptcy anyway.  Another is why not just send the money to even poorer individuals?  The low market value of the debt, of course, means these individuals (mostly) would not have paid anyway, so the leveraged return on this investment is not as high as is being claimed.

For pointers I thank Mitch Berkson and Samir Varma.


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