Buchanan’s Samaritan’s Dilemma

The Samaritan’s dilemma is not only about the detrimental effects help can have on the beneficiaries. As James Buchanan explained in his 1975 essay, the dilemma is about inequality, strategic courage, and individual responsibility. It was a means for Buchanan to show how ethical courage matters to the promotion of equality.

Editor’s note: The current debate in economics seems to lack a historical perspective. To try to address this deficiency, we decided to launch a Sunday column on ProMarket focusing on the historical dimension of economic ideas. You can read all of the pieces in the series here.

Economists frequently refer to the Samaritan’s Dilemma to describe a situation in which a benevolent individual or institution transfers money to people in need that they do not use to improve their situation. As a consequence, after and despite a short-term relief, recipients are lose self-reliance, demand more and more help, and see their wealth decrease, among other things. Recipients suffer rather than benefit from the help they receive.

The Dilemma has been discussed in various environments—family, social programs, redistribution and aid to the poor, or international aid. The evidence is not always clear, but the phenomenon nonetheless exists and is more than frequent.

Part of this literature was influenced by James Buchanan’s 1975 essay “The Samaritan’s Dilemma“—that seems to be the first time the expression was used. In his work, Buchanan pointed to another problem: Samaritans can be durably hurt as well. To avoid that pain, Samaritans should be able to display strategic courage and individual responsibility, and appropriate institutions should be devised—a strong message that has crucial policy implications. This crucial message seems to have been lost, with rare exceptions such as in Dieter Schmidtchen’s or Emily Skarbek’s essays.

Buchanan’s Samaritan’s Dilemma

Buchanan’s Samaritan is caught in a situation in which she helps—via, for instance, some transfer of money—someone who takes the money but nonetheless does not work. Hoping and wishing that her gift would have led the recipient to work, the Samaritan is dissatisfied with the lack of effect her transfer has.

To avoid this unpleasant, asymmetrical, and unequal situation—she helps, he does not work—the Samaritan may decide not to behave charitably. Choosing this course of action would suppress the Samaritan’s dissatisfaction with seeing her altruism not reciprocated but also, in Buchanan’s analysis, would incite the recipient to change their behavior and work. Symmetry and equality would thus be restored.

Yet, according to Buchanan, this process is not costless. The Samaritan would suffer from seeing the recipient starve and from the loss of utility that stems from the impossibility of satisfying her altruistic preferences. An unpleasant situation replaces another one. A dilemma, indeed.

Altruism Has No Value In Itself

The dilemma would not exist, however, if the Samaritan was not dissatisfied with the initial situation in which she helps and the recipient makes no effort. Such dissatisfaction originates from Buchanan’s twofold assumption about charity. On the one hand, charity has a purpose: the Samaritan helps in order to influence the recipient’s behavior. On the other hand, and complementarily, charity has no value in itself: the Samaritan receives no psychological gratification from being charitable—the so-called warm-glow effect—and no psychological gratification from seeing the beneficiary’s income or utility increase.

Buchanan does not take these benefits of altruism into account because even if these benefits mean that the dilemma disappears, it also implies that the Samaritan is perfectly satisfied with the asymmetric situation in which she finds herself. Indeed, the benefits from altruism, if they exist, can be sufficiently high to compensate and even exceed the costs generated by the recipient’s lack of reaction. Then, the Samaritan accepts that the beneficiary behaves as he wishes, and does not try to change their behavior. The initial dissatisfaction that leads to the dilemma has disappeared. But the asymmetry remains, and that was precisely what Buchanan found problematic.

The Costs of Courage

To restore symmetry between the two parties, only one course of action was possible: The Samaritan had to accept to not behave charitably—that is, to suffer from a loss of utility in the short-term. Eventually, the recipient would make the expected efforts and take care of his needs. Then, the Samaritan could help him.

Acting in this way should not be too difficult. First, the Samaritan could understand that suffering from pain in the present will be compensated in the future—if she compares the present-day costs of not behaving charitably with the future benefits expected from seeing the recipient make an effort and work. Or, alternatively, the Samaritan could endure the loss of utility induced by not behaving charitably by following what Buchanan called an “ethic of personal responsibility”—meaning, she helps only those eager to work or make efforts, even if it is costly or painful because this is the responsible behavior to adopt.

Unfortunately, Buchanan pointed out in his essay, individuals are used to making decisions by comparing short-term costs and benefits and don’t exhibit the strategic courage required to follow an ethic of responsibility anymore—they are “soft,” to use Buchanan’s words. They do not mind helping even those who do not work and don’t punish even those who misbehave, rather than bearing the costs of being uncharitable. Put differently, they prefer asymmetric to symmetric situations rather than having to pay the cost or bear the pain of moving from the former to the latter. Since, for their part, recipients have no incentive to change a situation from which they benefit—at least in the short run—these asymmetric situations remain.

Buchanan’s concern was that individuals and societies would remain stuck in those asymmetrical and unequal situations because those who have to bear the costs of change would find it too costly or painful.

Generalizing the Dilemma

Buchanan made this point in strong and polemical terms in “The Samaritan’s Dilemma,” and, more neutrally, in many other of his works in public economics and public choice in which he showed how individuals could get trapped in one of these asymmetrical situations. For instance, an individual who finances a public good might want to exclude free riders but won’t, because the expected benefits of exclusion would be lower than the costs of devising and enforcing an exclusion device. Symmetrically, an individual will not oppose the provision of a public good even if it is socially wasteful so long as he benefits from it and if the burden of its financing is discriminatorily imposed on others. Similarly, an individual would not refrain from polluting because the costs are high compared to benefits that are low or difficult to evaluate—for instance, if they are received by individuals from another country or another generation.

Even more interesting and problematic is the question of property rights—and, more broadly, of the law—which Buchanan analyzed by using the same framework. In this example, a right holder—who is in the same situation as the Samaritan—faces an individual who does not respect her property rights, who is therefore in the same situation as the beneficiary of a gift. Enforcing one’s property rights and punishing criminals for benefitting from the product of one’s work is obviously costly. But a violation of property rights is also costly, at least given the loss of income. If the cost of a violation of property rights is inferior to the costs of enforcement, then the right holder has no incentive to enforce her rights, and the criminal can violate the existing property rights without having to fear any sanction. And, as long as the costs of crime remain below the costs of enforcement, criminals are not punished. This situation—the right holder works and the other party does not respect her property rights—is yet another illustration of the Samaritan’s dilemma.

Courage, Ethics and Institutions

Showing strategic courage or following an ethic of responsibility were the only means Samaritans could use to restore equality and symmetry in their relationships with recipients. This applies to societies as well: according to Buchanan, they should exhibit the same virtues as individuals—adopt a long-term perspective and show enough courage to guarantee equality and avoid that efforts fell on the shoulders of some. In Buchanan’s view, this required a high level of morality and courage.

Certainly, institutions could and had a role to play too. In case of moral failure, they could be taken advantage. For instance, Buchanan suggested devising small inclusive groups in which individuals would influence one another. At a higher level, an equal treatment for all could be guaranteed by the unanimous adoption of constitutional rules. Buchanan’s claims cannot but strike us as significant in a period in which some events—climate change, for instance—require long-term thinking and short-term efforts.