A Samaritan is a philanthropic individual who helps to those who really need it. We are not going to talk about the nobility of altruism or how morally and socially applauded it is considered to be, but an interesting economic theory known as the ‘The Samaritan’s Dilemma’. This dilemma of benevolence was first observed and theorized by the Nobel Prize winning economist, James M. Buchanan who also made significant contributions to the field through his
‘Public Choice Theory’.
The Samaritan’s Dilemma suggests that when an individual is presented with charity, there are two outcomes of this act. Either they will try to uplift their current condition through this charity or find themselves dependent on random acts of philanthropy and the inherent altruistic tendencies of humans. It is one of the major arguments against communism and socialism where resources are owned by the government and regular state aid is provided to the citizens, this aid is seen as charity, reducing incentives to work harder and thus making citizens inefficient members of the society.
A theorem often linked with the Samaritan’s Dilemma is the Rotten Kid Theorem, given by Gary Becker, it is considered to be a thought experiment in economics and is used to analyze family economics. It suggests, charity by a family member may conceal the selfishness of another member and make them act in accordance to the family values.
Becker explained this theorem with a hypothetical situation of a wealthy altruistic parent who gives money to his/her children to satisfy their needs. Out of the children there might be a “rotten” child who desires to harm their sibling but refrains to do so because of the fear that the parental monetary help would stop. This may seem as an okay thing. But, the “rotten” kid only wears the mask of love and compassion till the parental aid exists. It doesn't morally re-structure the kid, just delays the inevitable burning of their veil of pretense. It is mainly used to advise parents on how to distribute inheritance - on the basis of need and not actions, rendering the incentive of putting on a mask useless until after the death of the parent.
The Samaritan’s Dilemma is also used to understand the government’s transfer policy and its link to the insurance rates amongst the poor. According to a paper published by the American Economic Association, unconditional transfers or charity towards the poor results in them not getting insurance and rather relying on the philanthropy of the rich to bail them out when disaster strikes. This comes with the assumption that in the society, the rich care about the poor’s well-being. A major reason that a number of people in America are not insured for cases of natural disaster is that the Americans are extremely generous when it comes to distributing aid among the victims of natural disasters.
At the State level The Samaritan’s Dilemma and the aid provided by a country to another after a natural disaster can have severe repercussions. A World Bank Policy Research Paper written by Paul Raschky and Manijeh Schwindt discusses the two outcomes of foreign aid on a country’s natural disaster preparedness policy. It was found, on analyzing foreign aid dependence on ex-ante risk management activities factoring in the death poll due to natural disasters, the crowding out of foreign aid outweighs its preventive effects therefore decreasing incentives to provide protective measures.
We have discussed the adversities related to charity, but we cannot automatically turn off our humanity, can we? I’d sure like to, if anyone knows, please drop an e-mail.
The fancy economists (Nerds.) have come to rescue our humanity
and they suggest that transfers in kind are a non-paternalistic and efficient way of helping the poor. Transfers in cash are untied transfers, that means, they have the utmost flexibility when it comes to a person’s money basket. Transfers in kind are tied transfers, that means they can be used only for a specific cause, of maybe uplifting an individual’s economic status. This was hypothesized by Neil Bruce and Michael Waldman in their paper in the American Economic Review. They suggest that the inefficiencies that come along with charity and transfers can be avoided if transfers occur in the form of investments, example: job training, free education, etc.
No matter what, helping those who are genuinely in need is, and always will, be noble, so don’t eschew it. Making them self-reliant is a more noble task. Like Kathy Calvin said,
"Giving is not just about making a donation. It is about making a difference."
WRITTEN BY
PRACHI SHARMA
Image credits - Google Images
ความคิดเห็น