a) We have common goods problem. Even if you will not help save these child's, may be someone else will. You cannot help everybody. Of course this is for usual people, not superrich. For example, I heard something like Bill Gates paying for anti malaria efforts (sprayed anti moskito nets) more ore less single-handedly.
b) We have information problem. Charities have problem checking that their efforts brought results, have problem showing this to donors, and donors have every reason not to believe them. Main problem is that recipients of help are very far away from donors. This contrasts sharply with the case when you, for example, buy DirectTV programming and can look ot the same day.
c) People, reasonably, think that they should first look after themselves. That is what Adam Smith "invisible hand" expects from them. This is may be less a case for religious people who give to charities to "pay back" for some sins, but generally we can expect that people think more (and pay more) about themselves or their family.
Jason DeBacker wrote:
Why don’t more people give more money to charity?
If you asked someone if they would rather see $50 used to feed a child for a month or on another month cable TV (or whatever), I can’t imagine someone not saying that the child should be fed. But almost no one gives $50 a month to charity and many give that to watch cable television (or spend it on other “frivolous” purchases).
Why does this happen?
A few possible reasons:
- The history of charitable money getting into the wrong hands has scared people from donating.
- There is some kind of market failure (a la the story of the woman being attacked while the whole block watched and no one stopping it or calling the police).
- People really don’t care about helping someone else, but are ashamed to admit that.
- People just don’t think about donating.
Regards, Jason DeBacker