What To Give A Homeless Person For Christmas?

The festive season has just ended, and it has been a particularly harsh winter this year in Ireland. Although most of us enjoyed the snow, some two thousand homeless people in Dublin must have found it tremendously difficult.

If you’re feeling charitable, what’s the best way of manifesting this desire to help – Should I give a homeless man cash or a coffee? Because if you’re going to try and make a difference, it’s rational to maximise.

It’s true that there are support services provided by the government to help homeless people, including shelter at night. There are probably many reasons that potential candidates may be excluded from such services though voluntarily or involuntarily – drug use, mental illness, ignorance or behavioural problems.

So who do you give your money to, to begin with? Signaling theory allows us to distinguish between fraudsters and the truly needy. Since not everyone is equally desperate, this author has taken to only donating to homeless in the early hours of the morning where possible. This policy has both costs and benefits.

Sleeping rough as an indication of genuine misfortune is pretty effective, because it’s costly to fake if you have shelter to sleep in. Thus, it’s a credible signal in the same way that expensive engagement rings are a credible signal of a suitor’s long-term commitment.

On the other hand, such opportunities arise less frequently than the chance to donate to someone sitting in the street during the day. No doubt that all such individuals are worthy of some charity, but the rational donor wants to direct his funds to the most needy location. If you restrict yourself to donating during the night, you might direct funds to the most needy but total individual donations may fall.

Given the impossibility of determining how many fraudsters solicit charity on street corners during the day, the optimal response is to consciously donate more money at night that you feel that you otherwise might have. Rather than give spare change occasionally to the drug addict who approaches you at the Luas machine, it makes sense to give a decent contribution (albeit less frequently) to someone genuinely sleeping rough at night.

So if given the choice between food and cash, what do you give the person? Let’s assume that the effort involved in purchasing the food is negligible, and that you consulted them for advice on the sandwich’s contents. If you provide the individual with cash, they can use it to purchase whatever they want – including the food that you could have chosen on their behalf. Of course, they might equally spend it on cigarettes or alcohol.

Many might consider these less pressing or more frivolous needs. They might feel uncomfortable with financing such activity – perhaps even out of concern for the individual in question. This leads them to give the sandwich rather than the cash. But the cash is the more generous gift. To let your only judgement of another individual’s preferences interfere with the efficacy of your charitable act meanwhile, is hardly altruistic.

Maybe the homeless person is making a poor choice by buying cigarettes or alcohol? Not from his perspective. If you recognise that the person is in such severe need that you are willing to provide them with charity, then your only concern should be to make them feel as happy as possible given your donation.

If the homeless person spends the cash on alcohol and cigarettes, then these goods must contribute more to their happiness than food. There’s no reason to think otherwise. By (potentially) overriding their choice and giving them food instead, you’re assuming that you know what is best for them – despite not ever being in their situation or having to ever make such a choice yourself personally.

If you give them cash, they spend it in such a way to make themselves as happy as possible. If you give them the sandwich, you’re precluding the possibility that they would be made happier by something else. Might such choices be not in the longer-term best interests of the individual? Unlikely. Since future health isn’t a pressing concern for someone on the street, you might as well make them as comfortable as possible for the time being.

Alcohol and cigarettes are also products that you’re unlikely to see yourself starve to afford. When we use the term ‘starve’ here, we mean it in the most literal sense. Of course they’re likely to cut back on their food expenditure elsewhere to buy them, but why should that be any concern of yours? Give them the cash.

Of course, if we’re talking about extremely addictive drugs or serious alcoholics, this argument against cash may be stronger. For example, a crystal meth addict may seriously jeopardise his health by spending all additional income on drugs. Their short-term interests may be served by doing so, but they would clearly be better off if they took marginally better care of their health – even to the extent that this meant they could stay alive longer to consume crystal meth.

The alcoholic may find it easier to get back on his feet, or engage with public support services, if he finds it impossible to obtain alcohol. It may be painful in the short-term, but potentially good in the long-term. Does a policy of providing food and not cash make any difference in these cases? It’s pretty unlikely in the case of the alcoholic. If you meet an unhealthy-looking drug addict though, it might be worth giving them the sandwich.

Luckily, such individuals are at least somewhat identifiable. For everyone that looks like they have at least some control over their various addictions though, just give them the cash. You might feel less noble financing their cigarettes and alcohol, but they will be happier. If you’re a truly charitable person just looking to help, that should be your only concern.

Republished as “How to help the homeless” in Trinity News (10th of February, 2010).

© The Free Marketeer 2010

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