Economics of Begging

Alternate title for this post: How callous can I be?

It's a fairly common observation, similar to the bystander effect*, that if there are too many people begging for money in any particular area, people will feel far less of an impulse to give money to any of them. The thinking that I'm fairly certain takes place is: I have no better reason to give money to one of these people than I do to any other. So if I give money to one of them, I should give money to all of them. But I don't want to/ don't have enough to give to all of them.

While this is not sound reasoning, I do think it takes place in a lot of people's minds. I conclude this by extrapolating from the sample of minds I have access to. I think this phenomenon is fairly well recognized, though I have no data to back that up. If the above theory is true, it's tempting to say that people begging for money optimize their expected revenue by dispersing as far as possible.

Tonight, I noticed a countervailing trend. Usually, I'm walking fairly quickly. I won't notice someone begging until I am almost by them, and it doesn't register that I should consider giving them money until I've passedthem by. But at that point, I sometimes feel qualms about having not given that person any money. So I think to myself, "Self, you should give money to the next person you see begging." And then I pay more attention, so I'm less likely to walk by someone without noticing them. If this second phenomenon can also be extrapolated beyond me, it means that any individual person looking for money on the street wants to be in an area where there is at least one other person begging in close proximity. However, if there are too many more than one, no one gets anything. I'm not sure exactly where the threshold is.

Tyler has an old post on whether or not people should give to beggars (versus non-begging homeless people) that is far more succinct than mine, and better in a host of other ways.

*The bystander effect is where many people in an area all see an evil taking place (one person savagely beating another, say) and all decide not to intervene because they expect one of the many other people in the area to do it. The fewer people there are in the area, the more likely it is that one of them will intervene.