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Beggars and rent exhaustion
Tim Harford, The Undercover Economist, reports:
Rent exhaustion is no economists’ fantasy - go to any place with rich tourists and poor locals (Dar es Salaam, the first African city I visited, fits the description nicely), and you’ll see lots of people waiting for the one generous tip or overpriced taxi fare. If the tourists become more generous or gullible, the local guides don’t get richer, they just multiply. The bigger paydays become less frequent.
Tyler Cowen - an economics professor with a popular blog - argues in his forthcoming book, Discover Your Inner Economist, that for these reasons you may wish to give money away by wandering around a poor country, far away from the tourist trail, and handing cash to people who look busy.
Vicious fights over prime begging spots are yet another example of rent exhaustion in this context. If the begging spot is worth say $50 a year, beggars will devote up to $50 a year to keep the spot. Here is my previous post on whether you should give money to beggars.
Posted by Tyler Cowen on May 5, 2007 at 07:15 AM in Economics | Permalink
Comments
Yes, but isn't randomly giving away money a bit risky? Might as well wear a sign that says "Rob me"... Then again, just being a Westerner in a developing country is probably just as risky...
Posted by: Jack at May 5, 2007 7:25:47 AM
Being a westerner isn't necessarily any more dangerous. I do receive more attention here in Yemen, but I have never felt that I was in any danger. It's tough here when it come to giving to beggars. At least in the states I can rationalize not giving by saying that they'd just use it to buy alcohol or some other drug. Here, people are just poor. I do not give to people that use their kids as "pity magnets" or to people that beg in traffic. I try to not encourage dangerous begging locations or reward people for keeping their kids out of school.
Isaac
Posted by: Isaac Crawford at May 5, 2007 10:16:11 AM
Beggars in trains
Beggars in trains are maximisers.They maximise the number of trains they visit (up and down), maximise the number of bogies they visit etc.There are many beggars who prefer night begging, choosing night trains and if they get a chance will become suitcase lifters.
There exists a train begging mafia also.The mafia boss fixes a fixed target and every beggar has to collect the targetted amount every day.If they collect more the excess is theirs and they can enjoy.If they fail, severe punishment awaits them.Begging industry operating in Railways and elsewhere (yes, there is such an industry) has strong entry barriers, territorial division (beggar A cannot enter the rear side bogies and should visit only front side bogies while beggar B monopolises the rear side bogies etc; beggar A operates between station X and Y and from Y to Z another beggar takes over charge etc.).Begging industry employs all type of beggars-young,old,adolescents,infants ...all age groups.There are beggars belonging to different employment status: employers, employees, own account beggars and family workers.
Because of entry barriers even if you pay liberally,new beggars cannot enter.
Economics of begging industry is an interesting subject and why there is no books on this subject? (In an old book store off Brigade Road in Bangalore I saw a 1930s book by J.C.Kumarappa titled "The Beggars Economy of Mysore").
Posted by: GVV at May 5, 2007 11:55:01 AM
In Mexico, police sergeants auction off prime ticket-giving (bribe collecting) intersections to traffic cops.
Posted by: Steve Sailer at May 5, 2007 3:32:45 PM
My concern with giving money to people who aren't begging is that, in most places poor enough that this is a sensible thing to do, I don't trust the local rule of law enough to be sure that giving a random Thai kid ten dollars is any better for him than giving him a live cobra; ten dollars is worth beating a local up for (though the wrath of the police when the honour of Thailand is slighted is such that it's not worth mugging a farang for), and giving a random Thai kid a beating by proxy seems incivil.
Posted by: Tom Womack at May 5, 2007 4:44:14 PM
Vicious fights over prime begging spots are yet another example of rent exhaustion in this context. If the begging spot is worth say $50 a year, beggars will devote up to $50 a year to keep the spot.
This is of course true but just like with your other post on begging the alternative also needs to be considered. If the outside option for potential beggars is, say, small retail, or outright theft, then it is probably the case that the same rent exhaustion/congestion/fight for turf story applies in those "occupations" as well. Small retailers guard their spots jealously in the same way as beggers do. If you're going to subsidize somebody, either by donations, purchase of trinkets or by leaving your car unlocked, then you will get the biggest altruistic bang for your buck by putting your money in activities where the network effects (previous post) matter the most relative to the congestion effects. Free entry and mobility would equalize even these across the "occupations" though.
Posted by: notsneaky at May 6, 2007 12:17:21 AM
>> If the tourists become more generous or gullible, the local guides don’t get richer, they just multiply.
Very interesting.
Posted by: speedmaster at May 6, 2007 7:47:20 AM
When traveling, I absolutely will not give to beggars. I will, however, tip well above what is expected for any service rendered, spend lavishly on trinkets, and randomly reward those who are not actively in my face - akin to Tyler's suggestion.
Tom, I would suggest that the best use of your money isn't to give one random child a large amount of cash, but rather to spread that amount amongst several children. a) This helps more children, and b) spreads the risk out.
Furthermore, one travel series recommends not giving out cash at all, but rather bringing candies or pens to give to kids. I guess sort of the same argument that it's better to give a homeless person food rather than cash.
In any event, it doesn't feel 'right' to be thinking about people in these terms, I will be honest.
Posted by: fustercluck at May 6, 2007 1:01:47 PM
In Chile I was advised to give food, not money. It works really well, if you are going out, buy a small packet of bread rolls or something (which will cost practically nothing) and offer a roll to each begger.
If they're hungry they'll be grateful. If they refuse it, they were not hungry.
I found this worked nicely in Chile, India, China and down town Sydney (except in Sydney, NOBODY was hungry it seemed.)
Posted by: doctorpat at May 6, 2007 10:30:22 PM
The trick that worked for me was to pretend I was Russian - all beggars who specialise in harassing
tourists seem to have an innate knowledge of the prevailing exchange rates, and the moment they
heard 'Nyet, Russki' (spoken in gruff bear voice) they stopped bothering me and went to the next westerner.
PS: Probably wouldn't work now.
Posted by: Stephen at May 8, 2007 1:46:43 AM
The poor economic situation of undeveloped countries is unfortunate and nobody wants to have people starving. Therefore, I agree with giving beggars food rather than money as that way you know you helped them and that they won't misuse the money. Avoiding feeding beggars with their children to send a message that their kids should be in school is a concept since these kids are being used to create more pity on the family of beggars. On the other hand, what if these parents are worried their kids will starve at school. Do these children recieve regular food at school? With so much focus on begging, the tendency of indivduals to be self motivated and find/create work is greatly hindered.
The whole tipping extravaganza does create a surplus of workers in jobs with tipping. They flood the market which can cause standard wages to decrease. in turn, motivation of unemployed workers to obtain a non-tipping job is decreased.
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