Indirect Charity

Listening to a recent talk on African development by Karol Boudreaux, I noted that in general we here have two very different channels of influence on them there:

• Direct – For some things we do, our main declared purpose is to influence them. Eg., World Bank, USAID, or GiveWell.

• Indirect – Many things we do for other purposes also end up influencing them. Most such policies can be adjusted slightly to better help or hurt them there. For example, governments have policies on trade, immigration, war, and terrorism. Businesses choose where to open branches, where to buy supplies, whether to make job tasks easier to outsource, and how easily products can convert to foreign use. Individuals choose where to live and work, where to travel, and what products to buy.

When we do relatively little overall to help them, but have many interactions with them, it is probably more cost-effective to help them indirectly, by adjusting our other interactions. For example, lowering import tarriffs and immigration restrictions would helps Africans at a far low cost to us than most direct donations. Yet direct donation activities usually get far more attention in most discussions of what we here can do for them there. Why?

Obviously direct help is eaiser to explain and understand, and this should bias our efforts to some degree. But the idea of adjusting indirect policies isn’t that hard to explain – I think most folks get it after a brief explanation.  Yes, sometimes it can be hard to tell whether more of something helps or hurts them. But there are many others where the sign of the effect is pretty clear.

A better explanation is that it is too easy for observers to attribute your indirect policy adjustments to non-altruism motives. Your support for more open immigration could be attributed to your free market or cosmopolitan inclinations, and your consuming African music could be attributed to music tastes. Your opening a new branch of your business in Africa might be attributed to your greedy exploitation. Your donations to Oxfam, in contrast, are harder to attribute to non-charity motivations.

Now some do try to market consumer items as good ways to show your charity to them there.  Fair trade coffee is an example.  But it requires the “helpful” items to have close “less helpful” substitutes, so your paying extra can be interpreted clearly as charity, and not as preferring one kind of product to another.  In which case your extra payments for the “helpful” versions become much like direct charity payments.

Related personal examples are giving presents to friends and family at birthdays and holidays. The cheapest way to help such folks is to just be a little nicer to them during the rest of the year. But such behavior is easy to attribute to selfishness. If we go out to eat with them, for example, maybe that is just because we enjoy their company. So to send clearer loyalty signals, we go out of our way to take actions that are personally costly, like giving presents.

When spending any given amount to help others, you have a choice:

1. Actually help a lot, but be mostly unable to take social credit for your help, or

2. Help a lot less, but do so clearly and visibly, so you can take social credit.

You know what most folks do. Are you really much different?

Added: Katja had a related post exactly one year earlier.