The Necessity for Information Asymmetries in Charitable Giving

In economics, information asymmetries are a type of market distortion where the buyer or the seller has more information about a product than the other. This leads to transactions that are not adequately priced. In some cases where this information asymmetry actually is or is perceived to be too strong, say for example in a shady used car business, it can destroy the market - goods with real value can't be sold at the appropriate price because of the fear of getting a lemon and goods with no value are sold for more than they are worth. Because of this economists have been trying to breakdown information asymmetries to restore value in certain markets.

As I was thinking of charitable giving I thought of Christ's words, "Go and tell no man." I used to think that these were simple words of humility. As I thought about it today however, I realized there is a real value to Christ's command to tell no man.

Today I made food to give away to homeless people in the neighborhood. I was reluctant to give the food away for fear that someone might take advantage of me. I believe people would give more - especially spontaneously - if they could be assured that they would not be pressured into giving even more.

No single act of charity is big enough to satisfy the worlds needs. At the root of charitable giving is an individuals personal decision to give some resource to another who does not have the ability to get it himself. This presents a dilemma to the charitable giver, who of all those in need, should receive help? One approach would be to develop a grand calculation that assesses all possible human needs. A charity calculation that spits out a ticket with person, cause and amount for anyone who has a desire to give. However, besides the impossibility of such a calculation - it just might show human needs exceed means. This is another deterrent to charitable giving, why give if you can't satisfy all needs - people will suffer regardless of your contribution. Even beyond this there is something anti-charitable about identifying the greatest need and requiring that need to be satisfied before all others. I believe charity is a willful decision between two bodies, not to be ruled by laws of supply and demand - it is akin to grace. It is charity when the recipient has no claim upon the gift bestowed. When it is publicized that gifts are given however, crowds soon form and because charity is given to those with no claim on the gift, all those who did not receive the gift cry foul and challenge the decision of the giver. I believe charitable giving requires the givers decisions to be autonomous. The two moral dilemma's that result from this - the giver realizing the arbitrary nature of his gift and the recipient recognizing his lack of merit, creates fertile ground for the expansion of charitable giving.

If crowds form however, and beg, or even demand help, charity can retract. Need can overwhelm the supply and those that give can feel embattled, creating fertile ground for class schisms and conflict. Go and tell no man that charity may abound and the giver will be encouraged to give evermore and the recipients will learn to give as they receive.