SPEAKER_01: Amazing, fascinating stories of inventions, ideas and innovations. Yes, this is the podcast about the things that have helped to shape our lives. Podcasts from the BBC World Service are supported by advertising.
SPEAKER_02: Hello, I'm Emma Twin. I'm a virtual twin for Dassault Système. My job, simulate multiple medical conditions on myself to develop new treatments for all. Basically, I'm like a crash test dummy for healthcare. It may sound like science fiction, but in fact, it's just science. I explain it all on my LinkedIn account. Look up Emma Twin from Dassault Système.
SPEAKER_04: 50 Things That Made the Modern Economy with Tim Harford
SPEAKER_03: It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves not to their humanity, but to their self-love and never talk to them of our own necessities, but of their advantages.
SPEAKER_00: That was Adam Smith in The Wealth of Nations. But when Smith was writing that famous passage in the 1770s, his mail probably didn't include envelopes with arresting images of hungry children. When he strolled around his hometown of Kickcoddy in Scotland, he was not accosted by clipboard-wielding young women trying to sign him up for a monthly donation. These days we are frequently spoken to not of our advantages, but of other people's necessities. Charity has become big business. Although it's hard to say how big, there's little good data. One recent study estimates that the British, for example, donate 54 pence in every hundred pounds. That's three times more than the Germans, but the Americans give three times more again. That's also roughly what Britons spend on beer, not much less than they spend on meat and three times what they spend on bread. In economic significance, the charity fundraiser is up there with the butcher, brewer and baker. Charity, of course, is as old as humanity. The ancient religious custom of tithing, indirectly giving a tenth of one's income to worthy causes, makes modern donations of less than a pound in every hundred seem derisory. Still, taxes have replaced tithes and modern fundraisers don't have the advantage of claiming to speak for God. They need to be professional about persuasion. And there is a man who's regarded as the father of the field. Charles Sumner Ward. In the late 19th century, Ward started work for the YMCA, the Young Men's Christian Association. This is how the New York Post described him. A medium-sized man, so mild of manner that one would never suspect him of the power to sway hitherto reluctant pocketbooks.
SPEAKER_03: That power first gained wide attention in 1905, when his employers sent him to Washington,
SPEAKER_00: D.C. to raise money for a new building. Ward found a wealthy donor to pledge a chunk of cash, but only if the public raised the rest. Then he set an artificial deadline for this to happen. The papers lapped it up. Ward applied his methods far and wide. A target, a time limit, a campaign clock showing progress, publicity stunts planned with military precision. In the modern world, they all seem familiar, but when Ward came to London in 1912, they were novel. The Times was suitably impressed by his knowledge of human nature and an extremely
SPEAKER_03: shrewd application of business principles in securing the advantage at the psychological moment. The First World War brought more fundraising innovations, lotteries and flag days which
SPEAKER_00: have modern equivalents in wristbands, ribbons and stickers that show you've given money. By 1924, Ward had a fundraising firm and was advertising how much it had raised for everyone from Boy Scouts to Masonic temples. For the modern heirs of Charles Sumner Ward, what counts as a shrewd application of business principles? We can get some clues from advertising executives interviewed for the Guardian newspaper. Images of starving children don't rack up many likes on social media, they say. Build your brand instead. Engage and entertain. Economists have also studied what motivates donations. One theory is called signalling. We donate, in part, to impress other people. That would explain the enduring popularity of wristbands, ribbons and stickers. They display not only the causes that matter to us, but our generosity too. Then there's the warm glow theory, which says that we give in order to feel nice, or less guilty at least. Experimental investigations of these ideas have produced
SPEAKER_00: results that are, well, a little depressing. Economist John List and colleagues sent people to knock on doors. Some asked for a donation, others sold lottery tickets for the same good cause. The lottery tickets raised a lot more. No surprise there. But the researchers also found that attractive young women who asked for donations fared much better, about as well as the lottery sellers. The study dryly acknowledges this. This result is largely
SPEAKER_05: driven by increased participation rates among households where a male answered the door.
SPEAKER_00: That's evidence for the signalling theory of altruism. And you can see exactly what kind of pretty young lady these gentlemen were keen to signal to. Another economist, James Andreone, studied the warm glow idea by asking what happens to private donations when a charity starts getting a government subsidy. If donors gave purely from an altruistic desire to ensure the charity can function, then the donations should move to another worthy cause when the subsidy arrives. That doesn't happen, which suggests we aren't purely altruistic. We just get a warm glow from feeling that we are. It's starting to sound like Adam Smith's logic applies to charity after all. It is not from the benevolence of the donor that we expect a contribution, a fundraiser might say,
SPEAKER_00: but from their regard to making themselves feel good or look good to others.
SPEAKER_05: But if charities are selling a warm glow and the ability to send social signals, that doesn't
SPEAKER_00: give them much incentive to do anything useful. They just have to tell us a good story. Some people, of course, take very seriously the question of how much good charities do. There's a movement calling for effective altruism, featuring organisations such as GiveWell, which studies charities' effectiveness and recommends who deserves our cash. The economists Dean Carlin and Daniel Wood wondered whether evidence of effectiveness would improve fundraising. They worked with a charity to find out. Some supporters got a typical mail shot, an emotional story about an individual beneficiary, Sebastiana. She's known nothing but abject poverty her entire life.
SPEAKER_00: Others got the same story with an additional paragraph noting that rigorous scientific methodologies attest to the charity's impact. The results? Some people who'd previously given big donations seemed impressed and gave more, but that was cancelled out by small donors giving less. Merely mentioning science seems to have punctured the emotional appeal and cooled the warm glow. Which may explain why GiveWell hasn't even tried to assess the household names of the charity world, the likes of Oxfam, Save the Children and World Vision. In an exasperated blog post, they explain that such charities tend to publish a great deal of web content aimed at fundraising, but very little of interest for impact-oriented donors. Or, as Adam Smith might have said, never talk to them of our own effectiveness.
SPEAKER_06: My Indian Life is the BBC World Service podcast that brings you real life stories from young people in India.
SPEAKER_06: They're sometimes raw.
SPEAKER_04: They're sometimes uplifting.
SPEAKER_06: And they are always a fascinating listen. I managed to convince people to take me seriously. That's Kalki Presents My Indian Life. What is the point of just complaining? If you want to do something, do something. There's a teaser for the second season available now. Just search for My Indian Life wherever you get your podcasts.
