Question

Read an excerpt from a story, “Should You Give Money to Homeless People?” on page 7. Do not do a silly thing and “ignore the altruism factor” as the article suggests. Rather, think that people give to the homeless because they are altruistic. Think about how much a rational altruistic utility-maximizing person would give to the homeless. Then think about an efficient amount to give to the homeless? Is there a reason to think that we give (inefficiently) too much or (inefficiently) too little? Explain.

Should You Give Money to Homeless People?

Giving money to the homeless is an economic crisis of the heart, a tug-of-war between the instinct to alleviate suffering and the knowledge that a donation might encourage, rather than relieve, the anguish of the poor. …. THE CASE FOR GIVING What do economists say about the instinct to help the homeless? (For these purposes, I'm ignoring the altruism factor, the idea that if giving 50 cents makes us feel good then it's an inherently justifiable donation.) Some argue that giving cash to cash-needy people is the most efficient way to spend it. Indeed, the Congressional Budget Office has stated explicitly that the most efficient government stimulus targets the poorest Americans. And who's more indigent than a panhandler? What's more, if you donate to a charity, there are administrative costs and time-lags. If you put your money in the hands of a beggar, however, it's fast, easy, and guaranteed to be spent immediately.

Answer 1

What we can give the homeless or the poor may be less in terms of what their preferences and needs may be. There can not be an accurate amount to what they go through and to help them in all ways. A rational altruistic person may give the poor or homeless an amount what the person thinks would be apt to help the poor overcome his/her problems. The altruistic person would be willing to give the poor anything only after fulfilling his own needs and maximizing his utility. Thus, there is no appropriate or pre -determined amount that the person would give to the poor;rather it would depend on the prevailing situation.

Similarly, there is no efficient amount we can give to the poor as everyone would have different needs and thus different consumption patterns and requirements. However, the only possible way to allocate any amount to the homeless is by providing them with the basic requirement amount as per calculated under the poverty line regime of that particular country.

There is no point when we can determine if we have given efficiently  too much or too less as what the other person receives may be less or more in his perspective.  Also, we might at one point think that we can give the person some more and the desire to give more never ends. At other point, we might also think that the person received more than he should have and might think of giving less as we might think it shall be. Thus what we give depends on a number of factors and thus cannot be quantified in terms of less or more. Even if we not give the poor any amount, we may give them materialistic things and that may also be questioned as too much or too less. Thus, there is no reason to think of giving efficiently too much or too less.