Poverty & Inequality

The economics of begging

  • Blog Post Date 12 December, 2024
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Samreen Malik

New York University, Abu Dhabi

sm4429@nyu.edu

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Nishtha Sharma

New York University, Abu Dhabi

nishtha.sharma@nyu.edu

Informal estimates suggest that 60% of the world’s population engages in giving to beggars. This article provides a theoretical and empirical analysis of begging as an economic activity. Based on observational and experimental surveys with real beggars and donors in Delhi, it presents various insights into the preferences and perceptions of beggars and donors when it comes to paid work, free-riding, honesty, and ability. 

Begging – the act of soliciting alms in public spaces – is a widespread issue globally. While the number of beggars is hard to estimate, 60% of the world’s population reports “helping a stranger”, often a beggar, in the past year suggesting the large scale of begging worldwide (Charity Aid Foundation, World Giving Index, 2023). Begging is often viewed as both a social and economic problem. Beggars are not engaged in productive economic activity, and beggary is frequently perceived as linked to street crime, theft, robbery, marginalisation of the poor, violence, and exploitation. Consequently, there is considerable policy interest in mitigating begging, with varying degrees of legal regulation around the world, including India, with questionable effectiveness. However, economists have largely neglected this area of study, traditionally leaving it within the realm of sociology. 

In recent research (Sharma and Malik, 2024), we provide the first theoretical and empirical analysis of begging as an economic activity. We adopt a novel economic approach to analyse begging as a market, integrating insights from behavioural and development economics. The informal and transient nature of the population of beggars poses particular challenges for standard data collection and economic research, as they have no fixed addresses, or phones, and are often missed by traditional surveys or census efforts, rendering them a largely invisible group. Moreover, the existing survey measures and experimental tools to study the preferences and behaviour of the general population do not export well for the population of beggars as they are highly marginalised. In this article, we report on a unique effort to study the backgrounds and economic preferences of beggars and the general population of potential donors to beggars in Delhi. 

Theoretical model

We model begging as an alternative to the formal labour market, where beggars derive utility from donations and face disutility from stigma or harassment. In contrast, labour market participation involves a trade-off between labour and leisure. As a result, they may have to beg because they cannot find paid work in the labor market (begging by misfortune) or because they have a low preference for paid work (begging by choice). A donor may consider it fair that the beggars who are willing but unable to find paid work be given more in charity. Recognising this, beggars are incentivised to signal effort through activities that suggest willingness to work. 

The model predicts that signals of effort improve donors’ perceptions about beggars’ willingness to work, ability to work, and deservingness for charity, consequently garnering higher donation amounts towards them. If donations cover basic consumption needs, then only the beggars who prefer paid work (beggars by misfortune) engage in costly signalling by offering items. However, when donations are insufficient to meet minimum consumption needs, then beggars are not able to obtain any utility from avoiding the labour market or disutility from stigma or harassment, as satisfying one’s hunger is of utmost value. Hence, preferences for work do not inform the begging style. Rather, begging style may be determined by other factors such as expected profitability of signalling or access to signalling tools. 

Empirical design

To study the market for begging and test the predictions of our model, we focus on crowded areas in Delhi, such as streets near prominent temples, stations, and marketplaces. On average, we observe eight beggars per crowded street, with 2-3 offering low-cost, low-value items like pens or stickers while begging. Although these items have little economic value for passers-by, they may shift perceptions about beggar’s deservingness. Begging with items can suggest an effort to engage in a market-like activity, framing the beggar as someone trying to do something rather than simply choosing to beg. We propose that this behaviour signals willingness to work and begging by misfortune, influencing perceptions and donations. 

We collect data through four exercises to study beggars' preferences and donors' behaviour. First, we observe beggars in these areas, noting their demographics, the people they solicit, and whether money is given. This helps us compare the solicitation and success rates of beggars with and without items. Second, we survey beggars and donors immediately after observing a donation. One surveyor asks the beggar how much they received, while another asks the donor how much they gave, allowing us to compare donation amounts to beggars with and without items. We also collect socioeconomic information and beliefs about whether offering or not offering items affects donations. 

Next, as part of an extensive socioeconomic survey of 1,200 beggars, half with items and half without, we collect incentivised measures of their preferences for paid work. We give them a choice between Rs. 50 in free cash or a real-effort task sorting chickpeas into boxes, earning Rs. 25 per box, with a potential total of Rs. 100. This helps us determine how many prefer free cash over paid work. In addition, we measure and report findings on beggars’ abilities and preferences for free-riding and dishonesty, as well as donors’ perceptions of these traits, in the paper. 

Finally, we survey 1,200 Delhi households across income groups, excluding the poorest and richest 10%. Respondents view photo collages of four beggars – an adult male, an adult female, a male child, and a female child – and guess what percentage of similar beggars whom we surveyed chose free cash or the sorting task. We employ a “between-subjects” design such that each respondent is equally likely to see the collage of the same beggars either holding the items or not (so that all else, except the offering of items, is held constant). If their response is correct within a 10% margin of error then they win money, making them more likely to think and report their true beliefs. At the end, each respondent participates in an allocation to distribute Rs. 100 between randomly selected beggars (one with and one without items), which measures their perceptions of who deserves more charity. 

Findings

We find that beggars with items are equally likely to receive charity as those without, but they receive 35% higher donations on average. This difference remains large and significant even if we restrict the sample to the people who did not take the item or disposed it off immediately, or if we deduct the beggars’ self-reported cost of the item. While we find no significant differences in the actual preferences of the beggars based on their begging styles (with and without items), we find that donors perceive the beggars with items to be significantly less likely to choose free cash as shown in Figure 1. Interestingly, the 13% of the beggars who did choose free cash were also the ones who did not want a job that pays them as much as begging, and these are only the very old beggars. Almost all young beggars are willing to work but about half of them are perceived to be unwilling. Further, in the allocation task, respondents allocated significantly more than half of the funds to a beggar with items (Rs. 58 out of Rs. 100 to a beggar with items, on average). This suggests that signals of effort, such as begging with items, make a beggar appear more deserving of charity. In reality, however, beggars who believe that offering items is profitable tend to adopt this strategy, while those who view it as gimmicky or ineffective do not. 

Figure 1. Perceived share (left panel) versus actual share (right panel) of beggars who choose free-cash over paid work, by begging styles

Policy implications

Donors underestimate the proportion of beggars who came into begging by misfortune, making less than optimal donations. As a result, policies such as banning or criminalising begging, which increase the cost of begging by posing the risk of getting caught or police harassment, are ineffective. The returns to begging are already too low, and many beggars are begging by misfortune. Welfare policies such as cash transfers and upskilling, or workfare policies that pay beggars in return for work, would be more effective than legal regulations in reducing begging in such a scenario. Between welfare and workfare, workfare policies are more likely to receive support from the general population than welfare policies in societies where people care a lot about the notions of deservingness for charity tied to willingness and ability to work. Indeed, 80% of our respondents (donors) prefer unproductive workfare to unconditional cash transfers. 

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