Freakonomics: The Problem of Street Charity

Via the excellent Freakonomics economics blog (a daily read for me, now hosted by the New York Times), a piece on responding to panhandlers in the street. Five economists, five responses.

Here is the question put to them:

You are walking down the street in New York City with $10 of disposable income in your pocket. You come to a corner with a hot dog vendor on one side and a beggar on the other. The beggar looks like he’s been drinking; the hot dog vendor looks like an upstanding citizen. How, if at all, do you distribute the $10 in your pocket, and why?

From the responses:

I told Stephen that my allergy to economists was on moral, ethical, religious, and aesthetics grounds. But here is another, central reason: what I call “ludicity,” or the “ludic fallacy” (from the Latin ludes, meaning “games”). It corresponds to the set-up of situations in academic-style multiple choice questions, made to resemble “games” with crisp, unambiguous rules. These rules are divorced from both their environment and their ecology. Yet decision-making on Planet Earth does not usually involve exam-style multiple choice questions isolated from their context — which is why school-smart kids don’t do as well as their street-wise cousins. And, if people often sometimes appear inconsistent, as shown in many “puzzles,” it is often because it is the exam itself that is wrong. Dan Goldstein calls this problem “ecological invalidity.”

Read the whole post here. Login may be required; just use a fake login from the excellent bugmenot.com.

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