Bryan Caplan and David Henderson  

Economics and charity runs

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Dan Bakkedahl, Daily Show Correspondent, reports on Paul, a fellow in Boston who's frequently inconvenienced by the "Walkanazis"(follow the link to the "Look who's walking, too" video): the perpetual stream of charity runs and walks that stop him from taking the most direct route from home to work or Starbucks. Now, of course, Dan was making light of Paul's Acute Chronic Walkathonitis. But, Paul, I feel your pain. Discussion continues beneath the fold. Note of course that the Daily Show isn't a real news show. But it does have a certain truthiness to it.

Charity runs where participants solicit friends, family and colleagues for donations have always perplexed me. Time Outdoors allows you to search among hundreds of such runs; The Kormen "Race for the Cure" now counts about 1.3 million participants worldwide. Why might we see the bundling of runs with solicitation? Well, a friend hitting you up for a donation to some charity that he supports is less likely to be successful where he hasn't credibly demonstrated that he also believes the charity is particularly worthy. Engaging in a costly activity, like training for and participating in a gruelling run, signals that the participant really believes the charity to be worthwhile. The publicness of the event provides a mechanism for sponsors to verify that the participant has engaged in the costly activity and has the added potential benefit of drawing publicity to the cause.

The puzzle is the wastefulness of the training effort. Those soliciting me for sponsorship have cited upwards of 40 hours spent training for the event; we can view this training time as being pure waste from the charity's perspective. An alternative arrangement where race participants instead devote their training time to providing volunteer work for the charity, followed by a parade of volunteers rather than a race, would seem to satisfy the criteria listed above: costly and verifiable effort coupled with publicity. And, the hours of wasteful training would be converted into useful work. Given that charity races with sponsorship are very popular and parades of volunteers seem rather unpopular, something is missing in the analysis.

A grad school colleague once hit me up for a donation for his participation in a Habitat for Humanity project in the Philippines. While he agreed that comparative advantage would dictate that he instead work more in the States and donate the money to hire folks in the Philippines more competent than him to do the construction work, he also noted that that alternative wouldn't get him a trip to the Philippines. And, of course, I then declined to subsidise his vacation. In that case, it was pretty clear that the charity was bundling large benefits for solicitor/participants with its fundraising mechanism: the charity that bundles private benefits for participants with its activities will attract more participants. Charity runs provide participants a lot of warm fuzzy feelings about helping folks and showing solidarity with those in need; they also provide an enforced exercise regimen: backing out from the run after having solicited donations from friends would be uncomfortable at best.

Any individual wanting to help the charity would almost certainly do better to spend the time working overtime (or taking a part time job), donating the money to the cause, and asking their friends to match a portion of their contributions. But race organisers would not do better by switching to the "work plus parade" format as doing so would reduce participation by more than would be gained by transforming wasteful training into productive work.

I've also noticed that participants in these runs really do not like it when you suggest to them that the people they're trying to help would be better off if they'd take a part time job rather than do the run.

If this story is right, some testable hypotheses arise.

If my hypothesis about costly effort is correct, we'll expect that people who already are very physically fit, all else equal, will raise less money than those who are not as they don't send as costly a signal. However, if the event changes from a run to a race, physically fit people will raise more than unfit. Of course, those without a margin for increasing exercise effort will not see that effect. The most successful fundraising events will combine prizes for those showing good performance in the run with strong approbation for event completion by the less fit: this combination allows more types of participants to demonstrate a costly effort. Charity walks will raise less money than events that allow walking but that also reward folks who come in first.

Additionally, while all charities involve invocation of warm fuzzy feelings; the combination here with an inefficient costly task will mean that the ratio of NT to SF personality types among donors will be lower in charity runs than in overall charitable contributions. Gender differences in personality type would then predict more runs for charities targeted towards helping women than those targeted towards helping men.

In short, the charities would be worse off by switching to a more efficient mechanism because of reduced participation. However, you shouldn't feel bad about declining to subsidise a colleague's exercise regimen.


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CATEGORIES: Economics and Culture



TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/537
The author at qui tacet consentire videtur in a related article titled Subsidizing altruism and the National Infocomm Scholarship writes:
    Eric Crampton on Bryan Caplan’s EconLog writes: A grad school colleague once hit me up for a donation for his participation in a Habitat for Humanity project in the Philippines. While he agreed that comparative advantage would dictate that he ins... [Tracked on July 24, 2006 9:26 AM]
The author at heat death of the universe in a related article titled The wastefulness of fund raising writes:
    I've recently started reading several good economics blogs. Via one of those blogs, I ran across this post about the economics of charity races: Charity runs where participants solicit friends, family and colleagues for donations have always perplexed ... [Tracked on July 24, 2006 11:58 AM]
The author at Creative Destruction in a related article titled Charity runs? writes:
    EconLog, Economics and charity runs, Eric Crampton: Library of Economics and Liberty Some people object to one of my reasons for choosing to apply for a commision in the Marine Corps, namely that I want to improve my fitness, by... [Tracked on July 24, 2006 4:12 PM]
COMMENTS (10 to date)
michael vassar writes:

"In short, the charities would be worse off by switching to a more efficient mechanism because of reduced participation. "
Not necessarily. You are assuming that size and number of dollars collected are critically important. If, in contrast, it turns out that the number of NTs per SF in the charity's administration is critically important to determining whether the charity actually accomplishes *any* of its supposed goals, and if NTs can't effectively organize a charity run either, then the charities would be better off simply giving up on SF donors because the price of taking them on is greater than the (actually illusory) benefit

michael vassar writes:

"In short, the charities would be worse off by switching to a more efficient mechanism because of reduced participation. "
Not necessarily. You are assuming that size and number of dollars collected are critically important. If, in contrast, it turns out that the number of NTs per SF in the charity's administration is critically important to determining whether the charity actually accomplishes *any* of its supposed goals, and if NTs can't effectively organize a charity run either, then the charities would be better off simply giving up on SF donors because the price of taking them on is greater than the (actually illusory) benefit

Paul Gowder writes:

This is obviously correct. Have you ever looked at the advertising for participants in these events? They all heavily, and I mean HEAVILY, flog the training aspect of the thing.

The real wonder is why the falsity of the signal hasn't yet been realized by donors. If I know that you're only doing this run for the free workout training, I shouldn't interpret it as a signal of the worthiness of the training, right?

Acad Ronin writes:

Why don't we see a "trash pickup for the cure?" I think a trash pickup in a blighted neighbourhood would send a costly signal as it would be unpleasant and do the participants little good, beyond making them feel virtuous. It would also have positive external benefits beyond those of a run/walk/bike, etc.

NeedleFactory writes:

I learned recently that the entry fee for an upcoming marathon here in San Francisco is more than one hundred dollars.
If participants in charity runs get to run for free,
they enjoy a bundled befefit (akin to the Philippines vacation).

mjrmjr writes:

As NTs are a very small percentage of the population(a few percent, maybe?) I can't imagine that charity organizers are overly worried about losing their participation. That is, if they are even aware of MBTI classifications.

"Charity walks will raise less money than events that allow walking but that also reward folks who come in first."

I like this idea a lot in theory but I question how the determination and subsequent "handicapping" of individuals fitness levels would work in practice. Might the idea of being judged on one's fitness before taking part in such an event dissuade the least fit people from participating? My guess is that it would. Thus, while approbation for the less fit is a great idea, the actions that would be required to get a *true* measure of one's fitness going into the event(getting someone to step on a scale, bodyfat composition testing, etc) would probably deter many from participating.

This NT agrees with a lot of the criticisms of charity walks/runs in this posting but on the whole I can't get too worked up over it. For one, it's a great thing to have enough money and spare time to even be able to donate/participate in something like this at all. I applaud anyone who gives of their time and money to a worthwhile cause. Two, with the obesity epidemic this country currently faces I think that *any* motivation to get excercising is a good thing.

Eric Crampton writes:

mjrmjr: I wasn't suggesting that the event start handicapping participants; rather, that the folks sponsoring each participant have a rough idea of how that participant would do if he put in a serious effort. For some, just completing the event is evidence of serious effort; for others, coming in at a good time is evidence. The event that allows both to demonstrate serious effort does better if signalling drives things. As for applause, wouldn't it be louder if the participants were actually doing something useful?

Paul Gowder: I'm thinking of the race still constituting a costly signal where the participant has a metapreference for training but at any period would shirk; the race enforces the training effort but the signal remains costly because the participant would otherwise shirk in any period.

floydthebarber writes:

mjrmjr obviously doesn't live near any venues that frequently host such events, and thus doesn't have to pay the private cost of dealing with road closures, detours, litter, noise, and general hassle.

Steven Jens writes:

I seem to recall reading somewhere or seeing on television (I apologize for the anti-citation) that fraternity hazing rituals are far less effective if instead of being wasteful, stupid, and often dangerous, they are made socially worthwhile.

I think the suggested explanation had to do with cognitive dissonance -- that while someone required to drink urine in order to join a fraternity would have no rationalization except that joining the fraternity was worth the cost. Someone who is required to help clean a park to join a fraternity could rationalize that, hey, I helped clean a park.

Giedrius writes:

While training for my 12th marathon, it struck me that Eric was right as usual about what's really going on with charity runs, but he failed to mention the largest private benefit for the participants. I have a wonderful wife, but for a few fellow runners of mine the life would be much easier if they could say "hey, I am not going out this evening because I care for homeless children / species getting extinct / [whatever]". Perhaps we should introduce charity aspect in running events in our part of world as well.

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