Lessons in Fungibility and Gratitude

During the Ethiopian famine of 1984-85, Bob Geldorf was one of the celebrities who drew increasing attention to the plight of millions of starving people. He was affected by the news images he saw and raised money to send food to them through his music and a song called "Do They Know It's Christmas?" Around 100 million British pounds were raised.

On his return trip to Ethiopia, he recently learned that the money he helped raise didn't actually go to food.

One of the survivors told him: "We were reduced to a sub-human situation. When someone died, we went to bury him, and by the time we came back someone else had died. ... Our respect for you, our brother in hard times, is boundless. At a time when our dignity was questioned, you came and paid for people with energy to bury our dead."

In other words, aid is fungible, even in a famine.

To me, the shining question whenever this comes up is: Whose preferences matter? In-kind transfers and conditionalities answer, "It's my money. If they want it, they need to follow my preferences." Unconditional cash transfers answer that they are better placed to decide their own needs; their preferences matter. Is there any way to satisfy both?

I don't know. In December, though, I have to think about Christmas present parallels. How much of the gift is decided by the giver and how much by the recipient? Why are some of us offended when someone exchanges 'our' gift? When is cash the best gift, and when does the 'in-kind' gift show more thoughtfulness? What about gift cards? When does "the thought count" in international aid?

Now that the area is prosperous, Geldorf asked what else they want. "Well," I paraphrase them, "there is one thing. It's not a priority for the government or the aid agencies, but we need a fence to protect the bodies of the dead." He assures them they'll get it. Merry Christmas.

(Hat tip to Owen Barder, who focuses on a different part of the article where Geldorf asks, "Who says aid doesn't work?")