[EMAIL PROTECTED] (Wei Dai) writes:
>On Fri, Jun 06, 2003 at 12:25:11PM -0400, Robin Hanson wrote:
>> Typical charity recipients also do not have access to borrowing 
>> opportunities
>> that are as efficient as the ones available to you.  So yes you could help
>> them by delaying charity to people who would like to save, and borrowing
>> money yourself to give money to people who would like to borrow (and then
>> not giving them as much later).  But unless you have a way to tell which
>> charity recipients fall into which class, it is hard to see how to help
>> them overall.
>Good point. There is a way to tell which recipients fall into which class 
>though. Just ask them. That is, when giving to a recipient, instead of 
>giving a bundle of cash, have him design an income stream for himself 
>that has the same present value (to the donor) as the bundle of cash and 
>give him that instead.
>This might increase transactions costs significantly, however. So I wonder
>if there is a way to tell whether on average charity recipients would
>rather borrow or save. Could someone do a study where you pick a random

 I would start by asking whether their preferences tell us whether they
ought to be recipients of charity. Given two people who are reported to
be deserving of charity, one of whom will save and one of whom would borrow
if possible, it seems to me that we should take the desire to borrow as
evidence of greater need. One example of a probably deserving recipient
is a person with a fatal disease who can't afford a relatively cheap drug
that would cure the disease. If such a cure would enable the person to resume
productive work, the return on that investment in a drug would typically
be well above the market interest rate. The cost of curing diseases is
declining in a way that probably enables us to say that money invested
now and spent 50 years from now will cure fewer diseases. When I try to
imagine a person who is as deserving of charity but who would save the
money now, I always end up imagining someone who is more fortunate.

 So my guess is that we should give as much of what we intend to give as we
can now, unless that entails significant transaction costs associated with
borrowing. (I don't look like I'm following that advice, but that's at least
in part because my estimate of my future earnings fluctuates a lot.)

 Note that this analysis assumes that the reasons for charity are solely
intended to redistribute wealth to the least fortunate (although it might
also apply to redistribution of wealth intended to maximize efficiency by
giving wealth to those who can use it best). Only one of the charities I
contribute comes close to fitting that description (TrickleUp). I also
contribute to the EFF, and will probably soon contribute to the Methuselah
Mouse Prize, for reasons which include a desire to benefit personally from
increasing freedom and curing aging. I think my willingness to contribute
to charities of this type ought to depend in part on my ability to identify
organizations whose returns are at least as high as the returns on my
financial investments.
Peter McCluskey          | "To announce that there must be no criticism of
http://www.rahul.net/pcm | the President, or that we are to stand by the
                         | President right or wrong, is not only unpatriotic
                         | and servile, but morally treasonable to the
                         | American public." - Theodore Roosevelt

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