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Negative charity
Buried away in a tiny Telegraph column this week was a reference to one of the best academic studies to emerge in a long time. Doctors in a Scottish hospital have looked at the hidden costs of charitable parachuting, to the health service in particular, and published the results in the journal Injury (the link is to the abstract unless you or your institution subscribe). They found that the injury rate was 11% and the serious injury rate 7%. Minor injuries cost the National Health Service £3751 on average and serious injuries £5781.
As the average parachutist raised all of £30 (this is just a day out after all) each pound raised for charity cost the NHS £13.75. Every one of the charitable types who feels terribly virtuous raising money for charity in this way is actually preventing the health service treating the sick.
Here is the link, and thanks to Matthew Sinclair for the pointer. Can you think of other comparable examples of negative charity?
Addendum: Jeff Ely directs my attention to this example; buy and drink some water, so that Starbucks will donate money to address the water shortage (in other countries).
Posted by Tyler Cowen on April 24, 2006 at 03:28 PM in Medicine | Permalink
Comments
That would be the kids on my block last year selling 25-cent lemonade for the tsunami victims, using more than 25-cents worth of supplies (provided by mom) for product, signs, collection jar, etc.
Posted by: Richard Bellamy at Apr 24, 2006 4:11:26 PM
How about virtuously filling your car up with ethanol-containing gasoline to decrease your use of foreign oil?
Posted by: albatross at Apr 24, 2006 4:35:19 PM
How about 4 deaths while running for charity in the "great north run" sponsored by
a health care provider:
http://news.bbc.co.uk/2/hi/uk_news/england/tyne/4259174.stm
Posted by: jck at Apr 24, 2006 4:37:21 PM
Puzzling. There's a large recreational parachuting center not far from me,and from what I've heard about it the safety record is excellent. Those high injury rates cited in the study seem way out of line.
Posted by: Peter at Apr 24, 2006 4:48:12 PM
£3751 (US$6714) for a minor injury? I'll discount any claims as to the efficiencies to be realized by socialized medicine accordingly.
Posted by: mkl at Apr 24, 2006 5:07:41 PM
How about all those people who donated blood after 9/11? I seem to recall reading that most of the immediate glut had to be discarded as it couldn't be used in time.
Posted by: neil at Apr 24, 2006 5:32:18 PM
Ah yes.. I thought the idea of 'parachuting for charity' was somewhat bizarre, until I noticed the first commenter on Sinclair's site describing it as 'someone asked me to pay for them going skydiving.' Now that makes sense.
Posted by: neil at Apr 24, 2006 5:37:58 PM
The other problem with the study is that it assumes that the parachutists would not be jumping otherwise, which is likely not true. If all or most would have jumped and gotten hurt at the same rate anyways then raising money may provide a benefit over jumping and not raising money.
I also agree that cost and rate of injury both seem extremely high.
Posted by: gwu law student at Apr 24, 2006 5:40:51 PM
All bake sales that refuse cash donations in lieu of homemade cookies sold for less than the price of ingredients. Well, perhaps not a good example of "negative charity", but I just needed to get that off my chest.
Posted by: Pat at Apr 24, 2006 5:53:15 PM
I'm getting 18.49, not 13.75.
4% of 3751 plus 7% of 5781 is 554.71 in medical cost per parachutist. Divide by 30 and you get 18.49. What's wrong here?
Note that the abstract says that 94% were first time charity parachutists. Maybe that addresses gwu law student's point, as well as explaining the high injury rate.
Posted by: Bernard Yomtov at Apr 24, 2006 7:01:51 PM
Serious charity races have to be net value decreasing.
Folks spend weeks training for them. If the
participants would instead spend the time at a second
job, donating the proceeds to the charity. I just
don't get why anyone effectively asking me to buy
them a gym membership as donation should expect
to be met with ought but derision.
Posted by: Eric at Apr 24, 2006 7:10:49 PM
http://www.ethoswater.com/
ostensibly: make water available to others by consuming more water yourself?!
Posted by: Jeff at Apr 24, 2006 8:28:12 PM
Some of the criticisms just mentioned have come up before. The thing is that the amount lost is so huge (13 to 1) that the conclusions is robust to substantial changes in the injury rate. The cost number I would expect to be accurate given that it was compiled by the people performing the treatment.
Posted by: Matthew Sinclair at Apr 24, 2006 9:50:34 PM
As I understand it, skydiving centers require newcomers to make a certain number of tandem jumps (strapped to instructors) before being allowed to go solo. That helps keep the injury rate quite low. If there really were an 11% injury (7% serious injury) rate, the recreational skydiving industry would vanish pretty quickly.
Posted by: Peter at Apr 24, 2006 9:51:14 PM
That reminds me of a class I had in 8th grade where the teacher printed currency and ran a mini-economy. People were selling Blow-pops and home made brownies and stuff for as low as one e-dollar, which was the equivalent of $0.01, it was crazy. I ended the project with much less money than I started, and probably much less healthy too. But that four dollars and change I lost easily bought me $100 in snacks.
Posted by: BillWallace at Apr 24, 2006 10:16:02 PM
Donating to marginal revolution?
Posted by: snarky at Apr 25, 2006 4:48:17 AM
All of the above, though, are really pretty cheap. Here are three which are much worse:
-- giving free infant formula samples to HIV-negative mothers in countries with bad water supplies
-- allowing pharmaceutical companies to donate inappropriate medicines such as nicotine patches to refugees and disaster victims. http://www.drugdonations.org/eng/eng_nieuws6.html explains the reasons why this happens and the costs it imposes on aid groups
-- invading and occupying a country in order to give it democracy and freedom
Charity-parachuting and charity-bottled-water, though, are quite different from the above 3 and may not be truly comparable. They are basically a way to feel good about something you would might do anyway. The worst of this category IMHO is the practice of having socialite parties as charitable fundraisers.
Posted by: DK at Apr 25, 2006 8:51:26 AM
I second albatross' nomination of using ethanol.
Posted by: vtconomist at Apr 25, 2006 9:06:13 AM
VTconomist and Albatross,
The US is a country so wealthy that we can afford to burn food in the form of ethanol in order to feel virtuous. However, I can imagine a point in the near future where ethanol's net energy balance improves to the point that it balances sanctimonious ethanol buying and the practice ceases to be a "negative charity."
Posted by: John Sterling at Apr 25, 2006 9:26:59 AM
I had thought that one reason for these event inefficiencies was to solve a Lemons problem. I am thinking of solicitations to sponsor an acquaintance per mile of a "Walk to cure ____" or to contribute to Easter Seals from a neighbor. I trust my acquaintance and neighbor to have checked out the cause to make sure it is not a scam. This is just the Nelson advertising story applied to charitable giving.
Posted by: MW at Apr 25, 2006 10:37:05 AM
Correct me if I'm wrong, but I thought the reason we burned ethanol in our fuel was to get more gallons of gas out of a barrel of oil, not to save the environment? The same as MTBE, of which a ban just kicked in in some localities, stretching the oil supply just that much thinner.
Posted by: neil at Apr 25, 2006 10:39:29 AM
Buying Fair Trade could be an instance of negative charity if
you systematically overestimate the amount of "giving" that you're
doing, which -- for coffee -- would be no more than 2 or 3 cents on
the average cup, irrespective of the price you pay in the coffeebar.
$1.26 per pound for the green beans, lose 25% of the weight in roasting;
3/4 a pound of roasted beans makes 30 cups or so. If the market
price for the green beans had been $0.50 -- which would be the low
end for the relevant market (the price now is more like $1.20) -- then
that's about two and half pennies per cup. Tops.
But if people are overestimating that amount, and chalking up $2.00 or
a dollar or even a dime (!) in their mental account for charitable giving,
then Fair Trade might be sopping up more than its share of the Northern
benevolence. Unless, of course the average charity that people who buy
Fair Trade would otherwise give to is a negative charity, in which case,
Fair Trade would have to be reckoned as a positive (i.e. negative
negative) charity.
To say nothing of the potential leakages at the level of the co-op.
Well, to say something: To be eligible for certification, you must be
small farmers (too small to hire year-round labor) organized as a co-op.
There's the inter-co-op rent-seeking to get certification, there's the
inter-certified-co-op rent-seeking to get a larger share of the Fair
Trade demand (the capacity of certified Fair Trade co-ops is 7 times
greater than the amount that finds a buyer at the Fair Trade mandated
price -- the amount that each certified co-op manages to sell varies
from all to none), and the intra-certified-co-op rent-seeking to
determine how the (little) extra money will be used.
You can look at historical coffee prices here (Arabica is the relevant
type):
http://www.ico.org/asp/select7.asp
The figure on the capacity of already certified producer comes from FLO,
the Fairtrade Labelling Organization, which is the international umbrella
organization, but I came upon it here:
http://www.colostate.edu/Depts/Sociology/
FairTradeResearchGroup/doc/fairtrade.pdf
Posted by: T. Clark at Apr 25, 2006 11:08:57 AM
In a way, isn't all charity like this? Presuming that a large entity, such as a government, can better calculate need (less emotional, more resources to calculate), and can more efficiently allocate funds, doesn't individual charitable giving decrease the moral hazard of a proper welfare state?
There would be an exception fot eh Bill Gates model of giving, I would think, whiyh I would characterize as having considerably greater than individual resources, and narrowly focused on experiments that can prove models of giving that can later be more thoroughly funded by government-sized organizations.
Posted by: theCoach at Apr 25, 2006 11:49:37 AM
The assumption that a large entity such as a government can better calculate need and more efficiently allocate funds is highly dubious, as any public sector refugees will confirm.
Which is arguably one reason why the UK government is trying to build the capacity of the voluntary sector and farm off as much work to it as possible - in the recognition that organisations closer to the coal face can more correctly interpret the needs.
(Cynics would add that it also saves Treasury funds and of course they'd be right, but that's a separate point)
Posted by: The Charity Blogger at Apr 25, 2006 2:15:45 PM
There was a George Ade story (sorry no cite, probably written around 1900) about a charity fair. It toted up the costs vs. what went to charity, and iirc, ended up not much different from the parachute jumps.
As for the blood donations after 9/11, I don't think it was obvious early on that there would be so few injured survivors. Blood donation might count as a reasonable gamble rather than an ill-judged cost.
Posted by: Nancy Lebovitz at Apr 26, 2006 6:59:46 AM
