Economics and charity runs
By Eric Crampton
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.