Tyler Cowen quotes this:
Anecdotal surveys by journalists and police, and even testimony by panhandlers themselves, suggest that begging can yield anywhere from $20 to $100 a day—though police in Coos Bay, Oregon, found that local panhandlers were taking in as much as $300 a day in a Wal-Mart parking lot. “A panhandler could make thirty to forty thousand dollars a year, tax-free money,” Baker says.
Years back, a friend of mine got into a conversation with a homeless person and he told her that he made about 80 marks a day by begging. "Holy moly", I thought, "I'd have to work for seven hours in the pub to make that kind of money!"

As a rule, I never give money to beggars, because a) I don't have that much myself and b) in Germany there's a good welfare system. But recently I gave some. I was approached by two teenage girls who asked me for 50 cents "for the bus". I gave them the money. It took me about ten seconds afterwards to think: "Yeah, right, for the bus. They probably wanna buy drugs."

Why did I give them the money? Did they seem more needy than the average person that asks for change? No. Was I tricked into giving them money by their female charms? No, they were about 14 and also rather ugly.

There is a concept they have in social psychology: the script. A script is a knowledge structure about a typical sequence of behaviours. To take the standard example, most people have a script for "visiting the restaurant": You come in, hang up your coat, sit down, receive the menu, make your choice, and so forth. I have a script for dealing with your average homeless person that asks you for money. It's very short and consists of saying "no, sorry". But the two girls didn't fit the stereotype of the typical person that asks for money, thus they didn't trigger the script. They caught me off guard. Hence another psychological tendency that I believe most people have kicked in: Go along with what people ask of you.

You have probably heard about the famous Milgram experiments. In case you haven't, here's how Wikipedia describes them (references omitted):

Three people take part in the experiment: "experimentor", "learner" ("victim") and "teacher" (participant). Only the "teacher" is an actual participant, i.e. unaware about the actual setup, while the "learner" is a confederate of the experimenter. The role of the experimenter was played by a stern, impassive biology teacher dressed in a white technician's coat, and the victim (learner) was played by a 47 year old Irish-American accountant trained to act for the role. The participant and the learner were told by the experimenter that they would be participating in an experiment helping his study of memory and learning in different situations.

Two slips of paper were then presented to the participant and to the "learner". The participant was led to believe that one of the slips said "learner" and the other said "teacher," and that he and the actor had been given the slips randomly. In fact, both slips said "teacher," but the actor claimed to have the slip that read "learner," thus guaranteeing that the participant would always be the "teacher." At this point, the "teacher" and "learner" were separated into different rooms where they could communicate but not see each other. In one version of the experiment, the confederate was sure to mention to the participant that he had a heart condition.

The "teacher" was given a 45-volt electric shock from the electro-shock generator as a sample of the shock that the "learner" would supposedly receive during the experiment. The "teacher" was then given a list of word pairs which he was to teach the learner. The teacher began by reading the list of word pairs to the learner. The teacher would then read the first word of each pair and read four possible answers. The learner would press a button to indicate his response. If the answer was incorrect, the teacher would administer a shock to the learner, with the voltage increasing for each wrong answer. If correct, the teacher would read the next word pair.

The subjects believed that for each wrong answer, the learner was receiving actual shocks. In reality, there were no shocks. After the confederate was separated from the subject, the confederate set up a tape recorder integrated with the electro-shock generator, which played pre-recorded sounds for each shock level. After a number of voltage level increases, the actor started to bang on the wall that separated him from the subject. After several times banging on the wall and complaining about his heart condition, all responses by the learner would cease.

At this point, many people indicated their desire to stop the experiment and check on the learner. Some test subjects paused at 135 volts and began to question the purpose of the experiment. Most continued after being assured that they would not be held responsible. A few subjects began to laugh nervously or exhibit other signs of extreme stress once they heard the screams of pain coming from the learner.

If at any time the subject indicated his desire to halt the experiment, he was given a succession of verbal prods by the experimenter, in this order:

1. Please continue.
2. The experiment requires that you continue.
3. It is absolutely essential that you continue.
4. You have no other choice, you must go on.

If the subject still wished to stop after all four successive verbal prods, the experiment was halted. Otherwise, it was halted after the subject had given the maximum 450-volt shock three times in succession. This experiment could be seen to raise some ethical issues as Stanley Milgram deceived his study's subjects, and put them under more pressure than many believe was necessary.


In Milgram's first set of experiments, 65 percent (26 of 40)of experiment participants administered the experiment's final 450-volt shock, though many were very uncomfortable doing so; at some point, every participant paused and questioned the experiment, some said they would refund the money they were paid for participating in the experiment. No participant steadfastly refused to administer shocks before the 300-volt level.

There are two interpretations of these findings that I know of. The one put forward by Milgram is that people have a strong tendency to obey figures of authority. Another emphasizes that the shock level was increased gradually, so that participants were "sucked into" administering the high-volage shocks. This view suggests that less people would administer the 450-volt shock if that would be the starting point. (As far as I am aware, this hypothesis has never been tested.) I think a third factor is that participants, presumably, had never been in a similar situation. They had no script, hence suggestion worked well on them.

If you want to make people do something, don't just try to steer them in a certain direction, do it in a way that takes them by surprise.

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