We mentioned before that we were planning a trip to Mumbai (also known as Bombay, in India). At this we have been here for a few weeks. We will be coming back to the U.S. between mid-November and mid-December.
From a GiveWell perspective, one of the things that is very different about being here vs. in the U.S. is that here we are in close proximity to extreme poverty. We have written before that we see promise in giving cash directly to the poor; here, more than in NYC, I could arguably carry out a mini “cash transfer” program on my own. The question is whether I should.
Below I lay out a few possible options. My interest is not in whether these options are better than giving nothing, but whether they are better than reserving the same funds for my annual donation to a GiveWell top-rated charity (last year I gave to Stop TB Partnership).
Option 1: give to the children who chase after me.
I pass people asking for spare change in NYC, but in Mumbai I am chased after by children, which is a very different (and more emotionally difficult) experience. It seems pretty clear that these children are legitimately poor, and I’m tempted to give to them.
However, I think this option is clearly inferior to Option 2 below.
- These children, poor though they may be, are probably better off – and bringing in more money every day – than the children deep in the slums who are not venturing out to the nicest parts of town to chase after Westerners. (When we walk around in Churchgate, an upscale area, children run after us. When we walked along Juhu beach and ended up in a slum, people just asked if us we were lost, though I’d guess that they are at least as poor as the children we see daily.)
- There is also an incentive problem: I’d rather minimize the degree to which my gifts turn begging into a profitable operation. It’s possible that parents are keeping their children out of school to beg, or even that the children are essentially “employed” by someone in far less need; I don’t want to contribute to that dynamic.
Option 2: walk deep into the slums and give out cash more or less at random (or to people who “look busy”)
This is the approach apparently favored by Tyler Cowen. It has the advantage that it seems more likely to reach the people most in need, and that it seems less likely to contribute to bad incentives.
I still find myself hesitating to do this, and the primary reason is that cash transfer programs are so rare among nonprofit organizations. (I believe a nonprofit, while not giving out cash “at random,” could still find designs that minimize the negative effect on incentives, such as requiring proof of both low income and employment and using an EITC-like scheme). We have in the past vigorously questioned the fact that nonprofits don’t tend to give out cash, and we think it’s possible that this has more to do with self-serving attitudes toward their own value than with a considered judgment that such programs are not promising. Still, in the end I think it’s more likely that there’s just something I’m missing.
Perhaps the risks of money being used on alcohol and similar purchases are too high. Perhaps the recipient of the cash will incite jealousy or even get robbed (see the comment by Tom Womack on Marginal Revolution’s post on the subject). Perhaps highly unpredictable cash transfers creates another kind of bad incentive, encouraging people to focus on trying to manipulate their luck (for example, via superstition).
I’m ready to discuss, but not ready to execute on, an activity that I don’t see being carried out by anyone who clearly knows what they’re doing, has seen the effects up close over years, has seen unexpected consequences and learned how to deal with them, etc.
Option 3: give to local nonprofits.
This option is pretty far from the original idea of handing cash to the poor, but it’s the one that appeals to me most of the three. It seems that there are vast numbers of relatively small nonprofits here, focused on working directly and tangibly with a small group of people rather than on trying to run large-scale bureaucratic operations. Most of the people we’ve met have at least one such nonprofit they recommend, and the recommendations overlap to produce several nonprofits that I would bet pretty strongly are spending money responsibly and being as helpful as they know how to be with people they know fairly well. This seems to me to be a pretty reasonable alternative/equivalent to handing out cash.
My biggest concern with these organizations is room for more funding, an issue that has been raised even by the people recommending the organizations. The advantage of an organization’s staying small is that the people running the organization stay very directly connected to their work and its results; the disadvantage is that they aren’t built to scale, and it’s unclear how much good an outsider like myself can really do with an extra one-time donation.
What are your thoughts? Would you take any of these options or just save the money for my annual gift?