By Shreshtha Mishra
Ever wondered if the help you provide to people in need actually helps them? That for a child who cries vehemently in a public space for a candy and gets it eventually owing to the nuisance that he creates, might choose to do it again? Or, that a beggar might choose to spend the money given by you to buy drugs or liquor?
All of these possibilities bring forth The Samaritans Dilemma.
The loopholes of choice
When provided with financial assistance, a person is faced with two alternatives – To use the aid to improve their condition or to be dependent on the aid and choose to stop working.
[su_pullquote]A country with financial aid might choose to use the funds to rebuild the economy towards sustainability. [/su_pullquote]
This is a fairly common phenomena in the contemporary world and applies to nearly all spheres of life. A country with financial aid might choose to use the funds to rebuild the economy towards sustainability. However, it might also choose to become more dependent on foreign financial aid. When given aid, if the need for aid increases further in the future, the Samaritans dilemma becomes apparent.
Does charity actually do any good? Photo Courtesy: Today.comIt is easy to keep track of funds on a macro level as there exist many alternatives to ensure optimal utilisation. However, the task is extremely difficult on a micro level. For example, what a child begging on the street might do with the money given to him cannot be tracked. Thus, its proper utilisation cannot be ensured.
The free rider’s economy
[su_pullquote align=”right”]The effects of the dilemma are starkly visible in a socialist state. [/su_pullquote]
The effects of the dilemma are starkly visible in a socialist state. When the government believes in redistribution of wealth, the incentive of the poor to work reduces significantly. They become dependent on the assistance instead of trying to achieve higher productivity for themselves.
In a democratic country like India, people below the poverty line are given various financial aid and subsidies.
They have an incentive to work less and so, they quit their jobs to be just below the BPL and eligible for the aid.
The Samaritan’s Dilemma inherently points to the flaws of socialism. Photo Courtesy: Wikiwand.[su_pullquote]Due to the state-financed welfare program, people had an incentive to overstate their need and understate their income.[/su_pullquote]
This can also be illustrated using the example of the Food Stamp Programme in the US. Due to the state-financed welfare program, people had an incentive to overstate their need and understate their income. This put an excessively huge burden on the budget of the country. Thus, a welfare programme meant to quench the need of the population ends up increasing the need further.
An increase in the endogenous supply of the behaviour that policies were meant to eliminate surfaces. This reduces efficiency and productivity and ends up doing more harm than good. However, policy makers rarely ever take this into account because they have vested interests and it largely affects the outcome of the elections.
A transparent charity
[su_pullquote align=”right”]The Samaritans dilemma is a fact of life and cannot be completely done away with. [/su_pullquote]
The Samaritans dilemma is a fact of life and cannot be completely done away with. However, effective tracking programs can be established to ensure that the money or the goods handed out to the needy are used for the intended purpose. This can be in the form of tracking the development of a country in need of financial aid.
For example, In 1991, the World Bank forced certain economic reforms on India in exchange of the foreign financial aid provided. The homeless were to confirm their residence in the homes provided to them. Therefore, there must be policies to ensure that every welfare programme implemented achieves its target.
Government aid exacerbates the problem more than private charity.
As mentioned before, the government has a short term bias. It is largely concerned with how the people perceive the policy in the short run. Thus, they are less likely to consider the long term effects and worsening of the problem. On the other hand, private donors are more likely to make sure their donation is used as effectively as possible and that it achieves its target. Therefore, a person who funds the education of a poor child is more likely to track and be involved in the progress of the child.
Public welfare programme that fund the education of poor children are not too concerned with how the children perform. Whether the money handed out for books and uniforms is used for that purpose is also neglected. Hence, private charity must be encouraged rather than a large number of populist welfare programmes.