Recently, I have been reminded of these issues, but in a more personal and less economic way. An old roommate and good friend of my wife's was recently diagnosed with Type 1 Diabetes, which can be fatal unless treated regularly with insulin shots. Her story is simultaneously tragic and hopeful. To channel her frustrations, she and her husband have committed themselves to participating in a 72 mile bike ride around Lake Tahoe which requires that they raise $8,000 for Diabetes research. My wife and I wanted to support them to bring the the world marginally closer to a cure, but mostly because we love them and wanted to encourage them, which is worth a lot (even in the economic sense).
Tuesday, April 13, 2010
Value of Support
About two years ago, I wrote a post entitled: What is your most controversial belief? My answer was that I didn't support many seemingly worthy causes, namely giving to cancer research. I felt that charitable donations skewed the cost and benefit analysis done by profit seeking research firms. Thanks to loyal commenters I was convinced that caring friends and family affected by various diseases rationally subsidize such research, thereby improving overall welfare. Earlier this year I posted again to better explain why such donation drives had bothered me. I presented some research that showed by simply asking someone to donate to charity, you actually cost (in the economic sense) them up to $3.50.
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Personally I still think your most controversial belief involves the compatibility of individual freedom and sweatshop labor, but that's just me. :)
ReplyDeleteI've read a study--somewhere--that suggests that the optimal thing to do, when approached for a donation, is to give one penny. If everybody acts in the same fashion, the charity benefits greatly and the cost per person is virtually nil. (This, of course, assumes the fallacy that we live in an optimal and rational world. But it's still an interesting point.)
Not sure what you mean by "individual freedom and sweatshop labor". Are you referring to my belief about the benefits of sweatshops?
ReplyDeleteInteresting penny suggestion. Any real world application of it?
I was originally referring to your argument that sweatshop workers are "free" insofar as they technically have the choice between working or not working in the sweatshop...but then again, depending on which belief *you're* referring to there, I might want to change my answer. :)
ReplyDeleteNot sure if there's any real world application for the penny suggestion, though I suppose there's something of a parallel in charities or political campaigns explicitly asking for small donations. Notwithstanding the fact that it looks good politically to stand in front of the cameras and say "all our funds come from small donors," it probably makes them more money in the long run. The Salvation Army wouldn't make much money at Christmas if Santa Claus was calling for fifties and hundreds...and as far as we're concerned, the dollar that you or I drop in the bucket is--well, a drop in the bucket, even if we don't have that much to go around.
When I think free or not free I am exclusively thinking about natural rights: life, liberty, property, etc.
ReplyDeleteI guess a lot people are thinking freedom to choose a good life should also count. So does that mean everyone who lives before 1850 wasn't free?