Do Good Better


Like every other market, the market for good has two sides. On one side you have do-gooders. And, on the other side you have those in need of some good. In an earlier post, we briefly outlined the three steps in creating a market for good. In this installment of Do-Goodernomics, we focus on step one: finding a poor person. Remember, you are a do-gooder. Your goal is to move as many people out of poverty as possible. You have $100. And, you must give it directly to one person.

How do you begin your search?

You can do what most people in search of other people do and publish a personal ad.

“Financially secure do-gooder in search of a poor person. If interested, please respond with your name, address and an answer to the following question: How would you use $100? Feel free to leave a brief comment.”

How do you begin to screen the respondents?

Let’s say you receive responses from around the world and create an excel sheet. Thinking that you may share your database with others, you substitute “Poor Person” for each respondent’s name and use a regional location for their address.

Your instinct may be to review the responses from your own community first.

NameAddressHow I would use $100.Comments
Poor Person #1Southern California (United States)Job Training ProgramI am your brother.

In this case, you have a lot of information with which to make a decision. You know about your brother’s work ethic or lack thereof. You know about the privileges he has or does not have relative to others. You know of the opportunities he took advantage of or squandered. You may even feel comfortable passing judgment on how responsible you think he is for his current situation, whether or not he will land on his feet soon enough without your assistance, and whether or not your help will dull his incentive to seek out work.

NameAddressHow I would use $100.Comments
Poor Person #2Corner of Two Streets (United States)Buy warm clothes.I am homeless.

In this case and all subsequent cases, you lack information. Will the actual use of your $100 differ from its declared use? Are the cardboard sign, milk crate and threadbare clothing props? You have heard of “professional pan-handling.” And, you are unable to distinguish the truly homeless from those who are mimicking the homeless.

NameAddressHow I would use $100.Comments
Poor Person #3Appalachia (United States)Put food on the table.Single mother of three.

Even if you know everything you need to know to make a decision, there is one conclusion you cannot escape in all three cases. In your own relatively wealthy community, $100 does not go very far. In fact, it may not help any of the three out of poverty. And, even if it does, it may not move anyone else out of poverty. So, you turn your attention towards global poverty.

Your database is in the billions. Of course, not every poor person replied to your personal ad. And, some of those who did reply told you take your hand-out and go to hell. Even so, it’s in the billions. You have respondents living under $1.25 a day, $2.50 a day, and $5 a day. You decide to focus on those living under $2.50 a day. You also exclude the “Comments” column to make things more manageable.

NameAddressHow I would use $100.
Poor Person #1,265,983,042Yoro (Honduras)Buy school uniforms
Poor Person #1,265,983,043Central Province (Kenya)Host a festival
Poor Person #1,265,983,044Badakhshan Province (Afghanistan)Expand food stand.
Poor Person #1,265,983,045Capital District (Venezuela)Organize self-help group
Poor Person #1,265,983,046 Sonora (Mexico)Cross the border into the US

Now, who should get your $100?

You will need to add two additional columns to your excel sheet:

Does respondent move out of poverty? (Y/N)How many other people are moved out of poverty?

Of course, you will never know the answers to these two questions for sure. But, it’s our thought experiment. So, let’s make some more assumptions:

  • You have all the data you need.
  • Esther Duflo and Dean Karlan are your research assistants.

And, you understand the mechanism that links a respondent’s declared use of $100 to the number of people moved out of poverty. For example, the host of the festival earns entry into an exclusive network of his peers and gains access to economic opportunities. The food stand owner expands her operations and hires additional employees. The border crosser gets a job and sends home remittances to his family.

This is good news, right? Yeah, but…

What if the data suggests that you should focus your efforts abroad but you are adamant that all do-gooding “should begin at home”?

What if you had your heart set on buying uniforms for school kids but illegal immigration into the United States yields the highest return?

What if the local shop owner provides the surest escape out of poverty but uses child labor and only sells empty calories (fizzy drinks and chips) and alcohol?

What if the self-help group supports a left of center political candidate who rails against your home country in a national election?

Is it possible that your choice of who gets your $100 is guided by more than the objective to move as many people out of poverty as possible?  If so, which columns would you add to your excel file?

  • Sex
  • Religion
  • Race
  • Age
  • Disabled (Y/N)
  • Political Affiliation

What about the concerns you had when deciding whether or not to give $100 to your brother? These concerns also hold for those living on $2.50 a day, right? And, what if those answering your personal ad know your preferences? Don’t you face the same difficulties you faced when thinking about giving $100 to the guy on the corner?

And you thought this would be easy.

Stay tuned for future posts in the Do-Goodernomics Series.


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