Neat argument from Justin Ross at The Perfect Substitute:
The jeweler is productive because they take this shiny rock out of the ground, polish it up, and sell it to consumers for an amount that covers their time and resources. They are productive because they satisfy a consumer demand, and as any economist will tell you, we do not pass judgment on consumer preferences. When you think of it this way, someone devoting resources to increase their appearance of desperation in order to be given a handout, is no less “productive” than the jeweler. They are simply trying to satisfy the consumer’s demand to reduce neediness. You can think, if you must, of beggars as suppliers of satiable neediness, and charity-givers as consumers of satiating neediness. In which case, every dollar you choose to hand out is not wasteful or even unproductive outcome of some signaling game with unintended consequences, but another example of gains from trade that maximizes the well being of society.
I basically agree, but it depends on whether the relevant argument in the giver’s utility function is ‘giving to the needy’ or ‘not refusing to give to the needy when the needy are before me’. I suspect it’s a little from column A, a little from column B. If the good is simply not refusing (i.e. beggars make us feel guilty so we would prefer to give than ignore, but would prefer to not be confronted at all), begging should be seen as a threat in Nozick’s sense of an offer we would rather not receive. I tend to think charitable giving does produce utility above the hedonic baseline: Justin’s argument is a good, though very counterintuitive, one. We should note that beggars needn’t really be poor, but merely appear so.