King Rat (gkr) wrote,
King Rat

Eco 200: stolen food aid

(group) The deputy chairman of the Russian Red Cross complained in the 1990s that food aid sent to the country by Western nations was being stolen. "Russian swindlers are the most experienced in the world," he said. The deputy director of the Russian aid commission expressed the need for a centralized system to ensure proper distribution. Which do you think is likely to get into the mouths of hungry people faster and with less loss of spoilage: food that is distributed through government agencies and charity organizations or food that has been stolen? Why?

I would expect the stolen food would get into the hands of the hungry more efficiently. There is significant opportunity cost for thieves if they hold onto the stolen food. Spoiled food is worthless to them. They have incentive to sell it, even at lower prices. They will also want to recoup the expenses they incurred in stealing the aid. Since charities have no monetary incentive to distribute food, they have less incentive to distribute. Their incentive is their altruism and costs to get rid of spoiled food. They cannot (I assume) make money by selling the food.

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