Photo Credit: Prince Roy

If you want to help Indian children, please don’t give to child beggars.

Of all of the advice I might give to individuals traveling to India – or most of the developing world – the most important one would be

Don’t give to beggars

I realize this sounds cruel and callous. It feels cruel and callous to me, even when I know it’s the best choice – especially when I’m sitting in an air-conditioned car in India, idling at a red light, and  people who are clearly poor, clearly in need come to the window begging for a small handout. Just a few rupees, which, to an American or other Western traveler, is next to nothing. Change I probably wouldn’t bother to pickup off the ground if I saw it. Can you ignore such clear need without guilt creeping up on you?

I can’t. I feel guilty for my Western extravagance when I see the numerous beggars in India. Very guilty. But I still don’t give them any money. The reason is because I know – from a few simple economic principles – that giving to beggars is not a particularly noble deed. In fact, I’d say that giving to beggars in a poor, developing country – like India – is a bad act. It certainly doesn’t seem that way – and I don’t think givers give with bad intentions – but it’s still a problem. Let me explain…

Effective Giving – opportunity costs

When economists talk about any activity – related to money or not – we always discuss the opportunity cost of the action. The opportunity cost of an action is simply what you give up doing in order to do that action. If you spend ten minutes reading this post, that’s ten minutes that you can’t spend reading a book or another website. We live in a world constrained by scarcity – limited money, limited time, limited resources. And, of course, the amount of money you can give to charity is limited.

If you chose to give a rupee to a beggar, the opportunity cost of that act of charity is all the things you could have done with that rupee. The opportunity cost includes all of the other charitable giving you might have done with the coin – other individuals and organizations that might need the help that that rupee can bring.

I believe that everyone has a duty to help the less fortunate. But you should not just give – you should give effectively.

Giving effectively does not mean simply giving to the poorest beggars you happen to run into during a day of travel in a developing country. While I think the most effective use of your charity dollars is in giving to particular organizations (more on that in a bit), I understand the wish many people have to donate directly to individuals – but those individuals should not be the ones you see begging on the street.

Photo credit: Ahron de Leeuw

Giving to Individuals – rent exhaustion and incentives

When I’ve asked friends and relatives why they give to beggars, I normally hear responses discussing guilt over seeing the poor, a desire to help a person (especially a child or mother) they saw in need, or a feeling that it was a small thing they could do that would mean much more to the needy person.

But in their desire to help out others, they fail to realize they’re doing exactly the opposite by giving to beggars.

First, consider the incentives giving to children beggars creates – particularly the charity that rich travelers in developing countries can (and often do) give. Leaving aside discussions of mafia gangs and the deliberate crippling of children (as I’m not 100% sure this occurs, and have no information on how common it might or might not be), if you give a significant amount of money to a begging child (say $1), you’ve just given his parents (or the group he works for) a strong incentive to keep him begging, rather than in school or, at least, learning some sort of trade.

Second, there is a strong problem of rent exhaustion in begging. Rent exhaustion (or rent seeking) is an economic concept regarding the way individuals or organizations will struggle with each other in order to get a “free lunch” – with the cost of the struggle eating away much of the gain from the “free lunch”. The classic example of this in the study of political economy comes from lobbies, where competing industries spend significant amounts of time and money in order to influence favorable legislature. It’s worth paying $3 million dollars in lobbying costs, after all, if it means you get a $3.2 million dollar contract.

The same problem occurs in begging activities. A person who could earn a dollar & a half a day in manual labor or a set of small businesses (as much of the urban poor does – see Banerjee & Duflo’s excellent and accessible paper “The Economic Lives of the Poor” for more information) might give up his work if he can earn two dollars a day begging from rich foreigners. Moreover, vicious fights – or extensive bribes – might be required to keep a prime begging spot (just as with lobbies & legislature), further eroding any “free lunch” a beggar receives from strangers.

So what are you to do, if you want to give to an individual, but shouldn’t give to a beggar?

Give to individuals who busy working and aren’t expecting anything from you. I first read of this idea in Tyler Cowen’s book, Discover Your Inner Economist (highly recommended), and the economic reasoning here is completely sound. As Banerjee & Duflo’s paper makes entirely too clear, the vast majority of the poor (those living on $2 or less per day) and the extremely poor (those living on less than $1 per day) work hard, often at multiple jobs while trying to send their children to school.

By giving in this manner – to people who clearly need help, but aren’t expecting it,  you aren’t requiring the poor to spend costly time begging in order to get help. No perverse incentives (make more money begging if you keep your kids out of school) have been created, and, since the working poor have not spent any time in seeking alms, there has been no cost to them in terms of rent-seeking. If you want, you can see this strategy of giving as a reward to hard-workers, but, in reality, this is the most effective strategy to give help to individuals you meet without requiring any sacrifice from them.

However – and this a big however – giving to individuals is probably not the best way you can help the poor in a developing country. Poverty in the developing world is the result of structural problems – lack of human and physical capital, poor governance, poor institutions, etc – that your marginal contribution can’t hope to overcome. I understand the desire for a human connection in giving, but I think that’s best left for volunteer work in your own local community.  If you wish to help the poor the BEST you can in a developing country you’re traveling through, wait until you’re home, then write a check to the best charity you can find. Check-writing is not as heart-warming as handing money or gifts to individuals you’ve met, true – but charity work should not be about you, the giver.

These children live in the slum at Manek Chowk.

Photo Credit: Meanest Indian

Give Well – measured & proven results

It’s likely that, if you donate to non-profit organizations, you’re doing it wrong. Or, at least, not as right as you could be (remember opportunity costs!). If there’s one thing my graduate course in development economics taught me, it’s that it is damn hard to effectively help the poor. Many of the programs we believe will do good – such as the Grameen Foundation’s Village Phone program or agriculture assistance – don’t actually achieve much when economists go back and try to track the results of intervention. Good-sounding development projects just don’t necessarily result in good outcomes.

It is critically important that charities’ programs and projects are evaluated carefully so that we can send money to programs that we know are providing effective help to those in need. Luckily for those of us who don’t have time to search out the charities that are tracking outcomes and proving their programs effective, there’s an organization out there that is already doing this work: GiveWell

GiveWell examines charities – you can submit your favorite charity if they haven’t evaluated it yet – and asks them the tough questions about how they’re measuring their projects’ impacts. Very few charities pass their inspection – but for the ones that do, you can be certain that your donation dollars will have a true impact on the poor. After examining their site in-depth, I remain extraordinarily impressed by their thoroughness and their commitment to looking for the most effective charities in the world

Perhaps the greatest acclaim I can give them is that all of my future donations will be going to GiveWell’s top-rated charities, such as the Stop TB Partnership and Pratham, a large, India-based organization that runs a wide variety of programs aiming to improve education for children in India. If you’re looking to help the poor as best you can in the future – effective giving that focuses on those in need, not you, as the giver – then, please, donate to one of GiveWell’s top charities as well.

Anyway, I’m informed that most people don’t think about romantic relationships in terms of intertwined, interdependent utility functions. But I do. And I think you should consider the idea too. Think of it as practice in learning how a subculture (a geeky, mathematically-inclined subculture) thinks about love and romance.

Economics – quick & dirty

Economics isn’t an inherently sexy subject. Most people, in fact, think that economists only study things like banking and capital flows and, well, money-stuff (and that we’re incompetent at it, too, what with the whole financial crises “thing”). However, at its roots economics is all about happiness – except that economists call happiness “utility” to keep you common folk clueless. How do people, given all of the constraints of mortal life – time, energy, physical resources, limited attention spans – best make themselves happy? And when you have a bunch of people engaged in trying to be happy, how do they interact as a group – as an economy? When you go back to this basic view of economics, you (or, at least, I) realize that it should have a heck of a lot to say about personal relationships and marriage – after all, that’s one of the key things that most people need to live a happy life.

So how does the economic approach to happiness differ from, say, psychology or sociology? Well, economists do it with models. (Heh.) That is, economists try to sketch out the underlying key features of a situation  in much the same way a map tries to sketch out the key features of an area. And just like you could have several different maps (topological, major roads, sites of interest, etc) of the same region, you can several different economic models of the same sort of situation, with each emphasizing a different facet of human behavior. For example, a model describing how you and your spouse decide which restaurant to eat out at tomorrow could focus on the process of bargaining between spouses to be that night’s “restaurant decider”, or it could focus on how the emphasis on the price of the meal changes compared to how you two would decide to weigh costs if you were dining individually, or it could focus on the strategy each person uses in suggesting restaurants to reach a solution satisfactory to both parties (with Aditya, my strategy is to say ‘sushi’ if I’m in a sushi mood, and otherwise chant “channa, channa, channa” until he gives in and we go get kabobs and chickpeas).  Most of these economic models are written out in a mathematical manner in order to make clear exactly what the model is assuming and what its predictions are. Which leads us to…

Fun, exciting utility functions!

Utility functions are the way economists describe what makes an individual happy – remember how utility means happiness in economic nerd speak? And, as you may have guessed, utility functions are often pretty mathematical in nature. However, I’ll be keeping the discussion light & easy for the less math-inclined amongst you.

A very basic, general utility function looks like this:

U = (a, b, c, d, e, …)

where U stands for the total utility (happiness) a person has, and the letters stand for various things you can have and experience that bring you joy. So, for example, “a” could be the experience of watching the sun set on the beach, and “b” could be the experience of watching the sun set from the top of the Eiffel Tower (and “c” could be the experience of sitting in Kabob Palace at sunset & would very likely be combined with “d” – eating channa).  You’ll note that in the utility function I didn’t spell out exactly how much happiness each one of these items could bring me. That’s because I, like most economists, am lazy.

Paired with every utility function is a cost function, describing how much of various resources it’ll cost me to get each item that might bring me happiness. So, for instance, sitting on a beach is free, but it’ll still take gas money to get there, and, of course, that precious resource of time. Flying to Paris, obviously, takes even more money and time – perhaps enough that I prefer the trip to the beach, at least right now. Sitting in Kabob Palace at sunset might not bring me much happiness – but it does make the cost of achieving “channa eating” a lot lower, since I’m already right there in the restaurant. No travel time at all!

Intertwined utility functions

So what does this all have to do with relationships and intercultural marriages and such? Well, like I said at the start, lots!

Economics gets a bad rap as only considering selfish efforts to maximize one’s own happiness as “rational” You have a utility function, and you try to choose all your stuff so that your end result is a really big number for your utility. And, yes, there are a lot of simple models of relationships and marriage that take this approach. But nuanced economics is none of that. Instead, we have an interdependent utility function, where your partner’s happiness is incorporated into your own. And that’s what partnership is really about, right? So my utility function might look something like this:

Gori Girl’s Utility = [a, b, c, d, e, ... , Aditya's Utility (a, b, c, d, e, ...)]

Now, for me, this is a really romantic notion – this is what love is all about (remember, we established that I might be insane at the top of this post).

It’s not a matter of “well, if he’s happy, my life is easier and less stressful, and thus I’m happier”. It’s not a matter of simply adding together his happiness and my happiness and coming up with a value for our family’s happiness. And it’s certainly not a matter of wanting to please him just because we’re partners or because he’s another human being deserving of happiness. Please – I’m not that good a person to be able to incorporate every one’s utility function into my own. No human is. Instead, it’s just love, plain and simple. A world where Aditya’s happiness is 253 oodles of joy is a better one than where he only has 252 oodles of joy (yes, joy is counted in units of oodles. Because oodles is a happy word.)

And it gets better! Imagine if Aditya’s utility function looks like this:

Aditya’s Utility = [a, b, c, d, e, ... , Gori Girl's Utility (a, b, c, d, e, ... , Aditya's Utility)]

Well, now we have a recurrsive function, where his utility is based off in part my utility, which is based off in part of his utility, which is… This is the absolute brillance of human relationships – our joy is compounded by the joy of those around us, forming a gestalt of happiness where the sum of the whole is greater than each individual piece broken out. And all this just from a couple of simple formulas!

Of course, this economic framework to not just made to be awesome – it’s also a very good way in my mind to frame relationship issues. There’s still tradeoffs to be made (and as we all know from the stand-up economist, this is not a good thing), since the things that make Aditya and I happy aren’t identical. But when we choose to do something he really wants – like get a pingpong table rather than an, ahem, way more useful outdoor table for the deck – I can remind myself in moments of frustration that, hey, Aditya’s utility matters quite a bit too. This reframing of the issue is particularly important for me, because, frankly, by nature I’m a pretty independent self-centered person.

I suspect that this framework can also give one insights into the extended family of Indian and other “Eastern” cultures as well. To grossly simplify a complex matter (remember, models are about simplifying to key components, even if that leaves out some important details & exceptions), we’re taught in the US that, ultimately, your life is yours to lead – and you should make your decisions based on your own desires and happiness. Basically, it’s okay for your utility function to not include other individuals, beyond the  basic respect you should give all people. On the other hand, in cultures where your family members’ utility functions are considered a key component of your utility function, it’s simply not rational to ignore their desires and happiness, or to try to place those on an order below your own – after all, their happiness is a core component of your own happiness. You can’t separate the two.

Obviously, like all simplifications – or all models overall – intertwined, interdependent utility functions aren’t a perfect representation of our relationships. They’re simply one way of looking at the world, and considering certain aspects of it, just like a poet might look at it another way. Of course, as a trained economist, this is the way I’m most comfortable thinking about the world – all math and analytics and no conventional romanatic leanings to speak of. But, then Aditya knew it when he married me – and in our cross-cultural marriage, I have it worse: he’s studied (and liked) post-modernism.

Personal News

1. I’ve decided to not continue with my Ph.D program in economics. Instead, I’ll be taking two more classes, then exiting with my masters. Obviously, this news doesn’t have too much to do with this blog, but it’s been a big change that I’ve been pondering over the past few weeks, which has sapped a bit of my creative energy. I still love, love, love economics, but I’ve decided the academic career is just not suited for my personality, interests, or lifestyle. Instead, I’ll do work that’s grounded in economics, but a bit more “real world”, and enjoy the fact that I won’t have to spend my nights and weekends trying to churn out research to get tenure. Plus: no horrendous job search at the end of five or six years of graduate student poverty.
   Intercultural tidbits: Aditya has been hugely supportive through this whole endeavor – first moving to DC with me so I could attend a Ph.D program, and now being completely cool about the fact that we moved across the country, just to have me quit the program a year later. His family has also been very understanding, even though I think they were looking forward to another daughter-in-law with a Ph.D. But they mostly want what makes me happiest, and understand that the academia wouldn’t. And this way my career is much more portable to India…
2. I’m still doing cool research this summer about India. While I don’t love research enough to do it for a lifetime, I do enjoy it, and I particularly enjoy the part-time job I have doing research with a European economist this summer. Get this: she’s married to a Bengali too! I recognized the golden wedding bangle she was wearing (a Bengali tradition), and asked. And, perhaps not surprisingly, her work has a focus on India. Simply put, the research is on how access to credit markets has affected Indian suicide in the rural areas – basically, when times get tough, and farmers see no way out, they often commit suicide. Access to reasonable lines of credit allow for a way out of the tough times, so you’d expect to see deaths go down as credit access goes up. Right now I’m just scrubbing the data (organizing it and making sure everything is right), but we’ll likely be running some regressions later in the summer to check whether the hypothesis is correct or not.
   Intercultural tidbits: pretty much all of it is intercultural and Indian – I’ve already developed a better “economic intuition” about India as a country by working through all the data.
3. I’ve gotten a great job. Apparently, economics Ph.D dropouts are a desired commodity on the labor job market, at least in the DC area. Despite the lowered economic growth (not yet a recession, though!), I was able to find a job very quickly as an analyst, partially due to a recommendation by a good Bangladeshi friend of ours. I’ll be working as in the field of wholesale power – i.e. energy markets – modeling how energy demands are changing in the United States, and what sort of resources will be needed in the future to meet those demands. It’s a pretty cool job for an economist, since energy is such a vital & dynamic part of any economy, and becoming more so. Plus I get happy feelings from working at a company trying to solve the coming energy problems. I’ll be starting this job this summer, while continuing to work on my research assistantship, and then will take classes part time in the fall to finish my masters. Should be a hectic time!
   Intercultural tidbits: I think I’m one of three or four white people in the (large) department. It feels like I’m back in grad school – or high school!
4. I just got out of the hospital – yesterday. Okay, this is a bit of a downer – and the reason I haven’t been around much this week. I recently developed, um, how did the doctor put it: “whopping big” blood clots in both of my lungs – i.e. pulmonary embolisms. Despite a bit of pain, I was never in any major danger, and I’m doing tons better now. The only downside is that, well, it feels a bit like I’ve transfered my mind into the body of an 80-year-old. I’m a slow-moving, slightly-wheezing, heart-racing lover of naps now. Seriously – I’ll sit down, and then, 15 minutes later, I’m out cold. Wake up an hour late, watch a few minutes of the Discovery Channel – then, whoop, I’m down for the count. It’d be rather amazing if it weren’t happening to me all the time. Luckily, this is a short-term problem, and I’m informed I’ll be back to normal pretty soon. Maybe not in marathon shape – but who are we kidding? It’s not like I was running marathons previously, either.
   Intercultural tidbits: again, Aditya has been amazing through all this: cooking, cleaning up, bringing me water, fluffing the pillows, listening to me whine between naps… His family has also been very concerned, calling several times a day from India to get updates and make sure I’m feeling fine. In fact, they’ve been doing a better job of calling than my own family has! (To be fair, Aditya’s family just talks more on the phone than mine does – and they like to keep in closer contact.)
5. Aditya’s parents are coming for an extended stay. This is pretty exciting news for us. They’ll be here for over two months this summer, which means we’ll have plenty of time to visit, see the sites, go on road trips, and the like. I’ll be writing more about this in the future, but right now Aditya and I are just pleased and busy with planning. We still need to purchase furniture (like, say, a bed) for the guest bedroom, and finish up with all the final unpacking around the house, but I think we’ll be ready by the time they arrive. They’re bringing curtains from India for all of the house’s windows, which is also awesome. I haven’t seen any of them yet, but I’m sure they’ll look great (Maa picked out the saris for my wedding too, so, clearly, she has good taste.)
   Intercultural tidbits: this visit will probably be a goldmine for topics and stories about our intercultural family, so look forward to it. We are!

Blog News

1. Skribit: from time to time I get emails from you guys requesting particular topics for a post. While I love getting those emails, I realize that not everyone has the time or energy (like the current, 80-year-old version of myself) to send off an email. So I’m enabling a widget in the sidebar, called Skribit, to allow you to suggest topics you’d like to see in the future without needing to leave the site. Just click on the “What should I write about?” section, then enter in what you’re interested about. And if someone else has already made a suggestion you’d like to see happen, you can vote it up. Or, you know, vote it down if you’re not too keen on the subject. I promise to listen to the voices of the masses, albeit not immediately. Gotta wait for the creative juices to start flowing (or for the napping to cease).
2. FriendFeed: I’m always finding a lot of interesting content, intercultural and otherwise, out on the internet. If it’s particularly amazing, or I feel the need to comment at length, I’ll write a blog post about it – but if I wrote a blog post for everything I was interested in, I’d be doing nothing but trolling the net and writing on this blog. So instead I’m putting in another widget which will show you the top of my “friend feed”: a list of all the stuff I find interesting enough to share, but not quite blog worthy. If you like something, and want to hear more about it, let me know (in the comments or skribit), and I’ll keep my eye out for similar material.