Sounds terrible? It's true. At least in places where it's plausible that money induces mutilation.
Gordon Tullock explained the basic principle in his 1967 article, The Welfare Costs of Tariffs, Monopoly and Theft. Where there is some rent available, real resources will be devoted to attracting the rent. In The Cost of Transfers, Tullock made it more explicit:
Suppose that T perceives that K may make a charitable gift. Under these circumstances, he would be well-advised to invest resources in becoming a more suitable object of K's charity. ... When I was in China, I used to occasionally see beggars who had deliberately and usually quite horribly mutilated themselves in order to increase their charitable take, and I always found the mutilations inflicted a considerable negative utility on me.
In the Western world, of course, these drastic measures are not normal, but anyone who is at all familiar with people who are objects of charity must realize that they do engage in a certain amount of resource expenditure to improve their receipts.That was 1971.
Here's Jillian Keenan at Slate, 2013:
Feeling good, doing harm. Even in-kind gifts can be a very big problem where they can be on-sold: the article talks about child beggars in Brazil selling milk powder given them by tourists to get crack cocaine.Tourists should never give money to child beggars we meet abroad. Not even the cute ones. Not even the disabled ones. Not even the ones who want money for school. Don't give them money, or candy, or pens. It's not generous. In fact, it's one of the most harmful—and selfish—things a well-meaning tourist can do.Many travelers already know that when we give money (or gifts that can be resold, such as pens), we perpetuate a cycle of poverty and give children a strong incentive to stay out of school. You also may already know that giving candy to children in some areas of the world actually causes enormous suffering, since many communities do not have the resources to treat tooth decay. But the reasons to never, ever give to child beggars go much deeper than that. Organized begging is one of the most visible forms of human trafficking—and it's largely financed and enabled by good-hearted people who just want to help.
In India, roughly 60,000 children disappear each year, according to official statistics. (Some human rights groups estimate that the actual number is much higher than that.) Many of these children are kidnapped and forced to work as beggars for organized, mafia-like criminal groups. According to UNICEF, Human Rights Watch, and the U.S. State Department, these children aren't allowed to keep their earnings or go to school, and are often starved so that they will look gaunt and cry, thereby eliciting more sympathy—and donations—from tourists. And since disabled child beggars get more money than healthy ones, criminal groups often increase their profits by cutting out a child's eyes, scarring his face with acid, or amputating a limb.
None of this would have been surprising to Tullock. Jillian Keenan concludes:
So we can’t say no. And we absolutely cannot say yes. What can we say?Find an inventive, responsible way to be kind. Recently, I’ve been traveling with a small hand stamp. When kids approach me, I put a stamp on my own hand and give them the option to do the same. I’m sure some parents aren’t thrilled to see their kid come home with a stamp on her hand—or, in the case of one particularly excited boy I met in the Philippines, directly in the middle of his forehead—but it has been a fun and minimally disruptive way to interact and prompt a few smiles, including my own. One friend of mine travels with a lightweight animal puppet and another always ties three long ribbons to her backpack and uses them to show child beggars how to make a braid. The options are endless.The imperative to not give money or gifts to child beggars doesn’t mean we have to turn our backs on them. Donate to responsible NGOs, and look for creative new ways to be kind to children that won’t disrupt familial dynamics, encourage long-term poverty, undercut local businesses, or abet human trafficking. Be generous: Leave those coins in your pocket.