Want to Help People? Just Give Them Money

Milton Friedman was a proponent (an originator?) of the idea of a negative income tax (as opposed to services). The idea of course, is that the problem of being poor is <i>money</i>, not services. Rather than explain it here, you can see him summing it up: <a href="http://www.youtube.com/watch?v=xtpgkX588nM" rel="nofollow">http://www.youtube.com/watch?v=xtpgkX588nM</a>

I'm astonished by some of the reactions here.<p>Giving money to the people who need it, means that the power to use that resource is directly in the hands of the people who have the most interest in using it well.<p>Frankly, their incentives are much more aligned with their long-term wellbeing, than are the incentives of a faceless charity committee in a Washington office somewhere. Plus, you don't have to pay for the endless decision-making - and the unavoidable inefficiencies in decision-making far removed from the action.<p>It's one of the reasons free markets win out over statist command economies - making much better use of information local to the decision.

The London homeless charity Broadway tried giving out money for a while. After a year, it was reported (independently) to have been a success, and in 2010 the Economist ran a feature on it.<p>The idea was that you ask people what would most change their lives. One wanted a caravan to live in. Another wanted a pair of new trainers and a television.<p>I'm unable to detect from Broadway's website whether or not they're still running this scheme.<p>The idea has merit. Poverty is a trap, and you need a chunk of money just to get normal life running. You can't type a CV and check your email responses from a doorway. Let alone think clearly.<p>The Fabians floated the idea way back. E M Forster: "Give them a chance. Give them money. Don't dole them out poetry-books and railway-tickets like babies. Give them the wherewithal to buy these things. When your socialism comes it may be different, and we may think in terms of commodities instead of cash. Till it comes give people cash, for it is the warp of civilisation, whatever the woof may be. The imagination ought to play upon money and realise it vividly, for it's the -- the second most important thing in the world. It is so sluffed over and hushed up, there is so little clear thinking -- oh political economy, of course, but so few of us think clearly about our own private incomes, and admit that independent thoughts are in nine cases out of ten the result of independent means. Money: give Mr Bast money, and don't bother about his ideals. He'll pick those up for himself".

I don't know about this. Didn't the aid from the '50/'60's work like this? How will you prevent an entire generation from growing up and expecting to receive money for nothing? Where is the pride in that? What kind of bahavior are you cultivating? I always assumed people were better of with a fishing pole than just fish, but maybe I'm wrong... Love to hear the opinions here.

When I was in my early 20s I found myself married to a wife who was a full-time student who couldn't work (due to brain dead immigration law), a $900 a month apartment, a car, an almost full-time job and a full-time class load doing my undergrad. I made, in my best year during that time, $16000. To say that we were poor was an understatement. An extravagant meal for us might be ordering the deluxe tacos at taco bell, or for an anniversary splitting an all you can eat pasta dinner at Olive Garden.<p>But we managed to just squeak by every month with about $5-10 in the bank at the end of the month.<p>We arrived at a point where we had to make a choice, have health insurance (the cheap one through the school) or pay rent and buy groceries. We chose food and shelter.<p>It was the wrong choice.<p>I came down with a mystery pain in my abdomen after recovering from a bad bout with the flu (which I had to work through or we couldn't eat). A night in the ER and a $10k bill later, it was looking like both my wife and I were going to have to drop out of school, we were going to have to break the lease on our apartment and move in with relatives, sell one of our cars and I was going to have to take on a second job sanding decks for $7 an hour.<p>It was too much to bear, my marriage went on the rocks, the relationship with my family and friends went to shit, I mentally shut down. All those years of effort, of dragging myself up the socioeconomic ladder. I became severely depressed.<p>Aggressive negotiation with the hospital saw the bills lowered to a still bankrupting but better $5k and a payment plan. It was the difference between dropping out of school entirely or dropping out for a semester.<p>Then the stars aligned. The bill finally showed up right before the summer break, meaning I could ramp up my work hours and work weekends and nights on a second job. My wife got her work permit which let her take on a part-time job. I got a dollar an hour raise.<p>We crunched the numbers and with aggressive belt tightening we were going to be able to pay off the bill and not drop out of school or leave our apartment. We worked like crazy, fevered, insane people. And then it happened.<p>We didn't know at the time, but the ER bill was not the final bill, some of the specialists also charged their own bill, and they wouldn't negotiate. Two 10 minute consultations with a surgeon turned into $500. An x-ray here and a couple lab tests and we were still out $1000.<p>We were broken people when those bills came. It was the last straw.<p>Then the next day, out of nowhere, a check from my uncle showed up in the mail for $1000. No strings attached. Pure charity. He had passed the collection plate at his church and asked for help, and those kind people each pitched in a few dollars to help people they'd never met before. And it was that church check that popped out of that envelope.<p><i>Everything</i> turned around after that. Freed of the crushing medical bills, but now with two people working and one less car payment, we finished off our last year of school at a sprint, both got full-time jobs and never looked back. A year out of college we were making enough to buy a house and a second car again. Two years after that we moved up to a nicer house and a better neighborhood and have had amazing careers since then.<p>That $1000 kept my marriage together, got me a degree, kept me from possible suicide, it meant no turning back or crushing dreams, it was the difference between weathering the storm or being blown away by it.<p>Another job wouldn't have helped, I was working over a hundred hours a week. A loan just meant more debt I couldn't pay off. It was pure charity that saved the day and I'll never forget that life lesson.

It's not entirely clear to me how givedirectly.org operates, but it seems they give in an unpredictable fashion, rather than continuously. That might make a big difference, since fixed amounts of money every week or so can lead to the receiver becoming dependent on the aid. But if receiving is not ongoing or predictable, this cannot really happen, while it might of course lead to stupid buying decisions when the money is received, that's not nearly as damaging, and might even stimulate the local economy.

There's an intriguing exercise in Paul Heyne's "The Economic Way of Thinking" that asks, as a thought experiment, what would happen if a helicopter simply dropped cash on groups of people that needed it--the thinking being that if people have money, someone will figure out some way to get them the goods and services they need.<p>(There's obvious security and fairness problems with this method of distributing aid, but if these could be solved somehow, this approach "fixes" some of the problems that afflict traditional approaches, such as the way in which they disrupt existing businesses, and make it difficult for new businesses to sustain themselves.)

I think in general this is a fantastic idea. Often, charity is too presumptuous: the giver purports to know what the receiver 'really needs', so rather than giving money they give something else.<p>I think this is shortsighted as it's very difficult for relatively wealthy people to put themselves in the mindset of somebody who is living in extreme poverty, especially in a different country. This makes it even less plausible that the giver can make a better decision than the receiver as to what to do with additional resources.<p>Put it this way: if you were really poor, would you rather be given money to help your sort your own life out, or for some charity to use the money for 'what's best for you'. I know what I'd want.<p>I also think from the point of view of the giver, it might be nice to be less judgemental about how the money is used. Even if a very poor person 'wastes' the additional money on a little luxury for once (say, cosmetics), then I hope at least the giver has brought a little happiness into their lives, if only for a moment. That's enough for me, and is why around a year ago I switched all my charitable donations away from Kiva (which I still think is a good cause) to GiveDirectly.<p>However, the idea is not without problems (as idenfied by Givedirectly). The biggest problem I think is that if some members of a poor community get help and others don't, it seems unjust and may lead to hostility.

This is the study they seem to rely on most: <a href="http://www.givedirectly.org/pdf/DFID%20cash-transfers-evidence-paper.pdf" rel="nofollow">http://www.givedirectly.org/pdf/DFID%20cash-transfers-eviden...</a>

While I agree that these countries need helping, it always annoys me how so much is spent on foreign aid when people in our countries are still living on the streets and in relative poverty - we need to solve our own problems before we start giving money away willynilly.<p>I've been homeless and unable to find a shelter because there were only 15 places in my town, I've known people who have been hospitalized because they couldn't afford food, how can we consider giving money to a foreign country when the people around us are struggling just to live?

That's an interesting take. I think Americans are probably biased against directly giving money because of experiences with homeless beggars here. Often the money does go directly toward alcohol and cigarettes or is otherwise spent foolishly. But in the US I'd argue that people living on the street usually have some sort of disability or personality problem whereas in a poor country, all the normal people who could do well with extra cash are extremely poor.

Define "poor".<p>The more I read discussions about poverty, the more I realize people are conflating wildly different definitions of "poor". The article is referring to $0.65/day, people who in no way can afford to squander a generous influx of cash. World median income is $2/day; if you're making more than half the people on the planet, I contend you're not "poor". The USA official "poverty line" is 20x world median income, and welfare ensures anyone under that line will be given enough to get there; special cases aside, that's enough that "poor" is more a matter of poor choices than poor cash flow, a life where a burst of cash can easily be spent on pleasure instead of leveraging already-neglected advancement opportunities.

Most cash transfer research is based upon conditional cash transfers. Which are small monthly payments based upon education, health or nutrition goals.<p>I actually like an organization called New Incentives that is able to uses the merits of cash transfers in a Watsi-like way...basically making it a conditional cash transfer. <a href="http://newincentives.org/transfers" rel="nofollow">http://newincentives.org/transfers</a><p>(fyi, this is not self-promotional but I connected with the founder because I like their concept).

The scary part is that the poor aren't necessarily uneducated -- read this article, for example, on PhDs who can only get by with food stamps:<p><a href="http://chronicle.com/article/From-Graduate-School-to/131795/" rel="nofollow">http://chronicle.com/article/From-Graduate-School-to/131795/</a>

Reframing required: give people money only when that is the most efficient option for helping them, given the risks of a no-strings cash donation.<p>Otherwise, help them in a way that directly affects their wellbeing, causing a direct, measurable change in circumstance with decreased risk.

"Recipients, who are often living on less than 65 cents a day..."<p>People living in Kenya on 65 cents a day is a completely different situation than, say, a homeless person in San Francisco.<p>I applaud the emphasis on data, but I'd be really careful with painting this issue with a broad brush. If anything, the roadways are littered with the corpses of programs that tried applying simplistic ideas too broadly. You also want to make sure you are measuring something that actually means something and not just something that's easy to measure.

I sometimes have a very cynical thought that some places should be given condoms, not food or money :(

Terrible idea. Charity runs out and therefore does not scale. Want to help people? Invest in them, as then they need to create wealth to provide a positive sum return. China did not become rich through communism or through charity, but through capitalism.

Direct Cash Transfer scheme in India has been touted as the biggest 2014 poll based factor by the educated class in India, with a subsidy system bigger than any other country in the world, India, has a lot of shortcomings in terms of how the subsidy reaches the poor. Subsidy is given for kerosene (household cooking needs for the extreme poor), rice/wheat as staple food, education (as weekly incentive to extreme risked kids), vaccines, salt, fertilizers, etc.<p>This system is way different the way this article makes it look like, that just give money to those who need it. But in fact, the real factor for a subsidy system to work is, that people overtime accept, that they need help, for ex: like they accept over time, that they will spend their own money on other things, while use the medical subsidy on vaccines.<p>This is fundamentally supported by the fact of efficiency, if they use that subsidy in any other way then it is meant, they would not get maximum efficiency.<p>Corruption in this system is a given, whether it is India or US, it is a very hard "on the thin thread" system to maintain.

Sure - This would be of great help to people in other countries, because they are not filled with lazy free-loaders like the western world. Westerners will blow the money and hold out their hand for more all they will promise in return is a vote to whoever promises to keep that free money coming...

want to help people ? give them a job that can help them live.

Give it the fishing rod to the wrong guy, he will pawn it, use the money to buy a fishing app.

There is such saying in Poland (although the origin of it is India): give a man a fish and you will feed him for a day, give a man a fishing rod and you will feed him for a lifetime<p>Yes, I know it's not scientific proof, but it comes to mind right away.