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  • Mathieu Provencher

To Give Or Not To Give... what a question

Let's talk about charity and poverty.

A little history of what I know about the topic: the development field is still struggling with finding ways to help less fortunate individuals in less developed countries. One of the problems the field has encountered is the distribution channels of their help, where vast amounts of goods (mostly food) and money never reached their intended recipients. Another major issue was that when it did reach the right people, it had almost no lasting impact on their lives.

The field has spent billions after billions in reducing poverty with very little success, given the amounts invested. The most successful poverty-reducing programme of all times seem to be China's economic growth in the past 20 to 30 years, where hundreds of millions of people were taken out of poverty and were able to insure a much better future for themselves and for their children. This, however, led to very substantial environmental and social costs. Note that China's goals were not directly to reduce poverty by itself but I would hope that it was still an intended consequence of their good Macroeconomic policies.

Now, for the exact case at hand: Behavioural Economists (a VERY cool sub-field of economics) have quite compelling evidence showing that people will think differently if their economic situation is difficult or comfortable. Poorer households tend to use their resources (mostly time and money) towards short-run goals that may actually have bad long-run consequences while richer households tend to use their resources more wisely, spreading the benefits over short and long timelines.

As such, the idea that poor people may go and buy alcohol and big motorcycles is actually fairly accurate. It doesn't happen because these poor individuals are intellectually inferior or incapable of logical thoughts... it happens because they are poor and we tend to approach life differently when we have very limited resources.

I'm aware of some specific studies showing that households seemed to invest that money in a sensible manner. However, you always have to be careful when reading these studies since we don't know how the money was given (with advices or not for example), to whom exactly (these groups that received it may already have been relatively well-off by their culture's standards), and how the authors defined "healthy" food and "healthcare" (farmers, although very poor in many countries, tend to eat well anyhow while no healthcare facilities tend to be close to them).

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