The Samaritan’s Dilemma is an economic concept that has wide-ranging consequences for today’s society. It deals with the economics of philanthropy and donation, and comments on the human nature’s potential to fall into patterns. The Samaritan’s Dilemma is highly related to the moral hazard problem. Adrienne Mitchell wrote a great article that relates moral hazard to senioritis, check it out below.
The Samaritan’s Dilemma is always present when giving need; that is, every time philanthropy or donation occurs to address a need, there is the possibility that it will incur more need. An example of this in a non economic sense is when you give a child candy once, they will ask for more candy. It is more of a psychological concept than an economic one, but because economics is really the study of human behavior there is a great deal of overlap between the two. The Samaritan’s Dilemma as it pertains to economics only occurs when the condition of being in need is in some way controlled by the individual who requires aid. For example, and this is purely theoretical, say there’s a homeless person who can control their homelessness, or at least influence it. They could get a job, but because of the help they get in their present state, they don’t do so, generating more need long-term than if the donor had not given aid in the first place. The Samaritan’s Dilemma is basically weighing the short term benefits of helping against the long-term cost of helping.
The Samaritan’s Dilemma also leads to perverse incentive issues, where instead of inaction, negative action is taken in order to receive aid. This occurs, say, when welfare is income based. If a recipient of welfare understood that the less income they have the more welfare they get, they may be motivated to take the second option, as it means less work for them. The help given has now incentivized against working harder to escape poverty, instead causing a rise in the number of those in need and the degree of their need.
If this is true for almost all philanthropy, how can any donation be effective? The answer is that there is no way to tell for sure, but steps can be taken to ensure that the dilemma has as little effect as possible. One of these steps is private donation. If there is no organizational middleman, that is, if the individual donating has control over how the resources are used, then the Samaritan’s Dilemma can be reduced. Because they are the ones controlling the money, the private donors would be incentivized to make sure that the money is effectively used and not abused for the short-term benefit.
The existence of the Samaritan’s Dilemma does not mean you should stop donating. There are many situations where the condition of need is outside the individual’s control, like the recent wildfires in California. For the people who lost their homes and belongings, it was not by choice. Donating for their benefit will not cause long-term costs, and the Samaritan’s Dilemma does not exist. For donation to other causes, however, you should keep the Samaritan’s Dilemma in mind when you donate. If possible, donate to an organization or individual who you know to be strict about their usage of funds. Philanthropy is an important way to give back, but we should be economically smart about it.
https://fee.org/articles/the-samaritans-dilemma-and-the-welfare-state/
This is an incredibly interesting topic. However, it seems that there are so many additional factors that one must take into account before they make their decision. For example, they must take into account their proportional effect of the donation and the motivation of the individual that they are donating to. This is an incredibly polarizing issue because one can use it to argue that we shouldn't support people so that they are motivated to get on their feet by themselves. In contrast, one can argue that donating to others is an integral part of promoting a strong community.
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