Economics of Volunteers

In a New York Times column, Alan Krueger surveys the economics of volunteer programs, which recently were promoted by President Bush.

Some volunteer jobs, like mentors and tutors, have been found to have a high social benefit, while others, like teacher aides, have a low benefit. In most cases, however, little evidence exists on the social payoff.

This rather discouraging finding should not be surprising. If an organization does not pay someone, then there is no incentive to use that person efficiently. In fact, at the margin you might expect that a volunteer would be allocated to an activity that has almost no value.

I currently teach on a volunteer basis at a couple of local high schools. I believe that this is a good thing to do. However, by disconnecting my work from market rewards there is a risk that what I am doing is far from socially optimal.

Discussion Question. Economists would tend to prefer a system that gives cash vouchers to people who need social services, rather than a system that is focused on voluntary provision of social services. What advantages does the voucher system have?