18 Oct 2009

Panhandling in Berkeley

This [unedited] guest post is by a student in my EEP100 class (background post).
Please praise/critique/comment on its economic quality and importance to you.

Laura Henkhaus says:

While many panhandlers in Berkeley maintain the same post each day, I wondered why any would choose to stand in front of the Dollar Tree.

A few blocks up from the Dollar Tree, on Shattuck Avenue, there are multiple movie theatres and moderately-priced restaurants, including a beerhouse, to attract people who possess greater spending power than Dollar Tree shoppers do. While someone on a student budget, such as myself, may eat at one of these restaurants, see a movie on Shattuck, and grab candy from the Dollar Tree, the average income of all people who dine at the restaurants serving $13-$22 entrees or see movies for around $10 likely exceeds the average income of all people who shop at the discount store.

So why would anyone stand in front of the Dollar Tree to ask for money?
  1. Perhaps lower income shoppers are more sympathetic to panhandlers and thus more likely to give money. The American Enterprise Institute has identified low-income working families as the most generous group in the U.S., giving away an average of 4.5% of their income in charitable donations. Middle class families dedicate about 2.5% of their income to charities while high-income families offer 3% in charitable donations.

  2. People pass through the Dollar Tree more frequently than diners pass through the small restaurants, and diners and moviegoers don’t come in as large numbers until night. Thus the panhandler may be able to ask more people for money in the daytime if he is in front of the Dollar Tree than if is stands in front of one of the restaurants or movie theaters.

  3. The panhandler may hope to stay close to the store where he hopes to spend the money he receives.
Determined to figure out the correct explanation, I approached the man with change and then inquired why he asks for money in front of the Dollar Tree when people who shop there don’t have a lot of money. He replied, “Yeah—I go to other places, too.”

Bottom line: The panhandler in front of the Dollar Tree recognizes the relatively low spending power of the people he asks for money from, yet he remains there because other factors make his time maximally utilized there or allow him greater convenience.


  1. There could be underlying turf issues at hand, also -- between this fellow and others who are panhandling on the same street. I would be interested in how mental health differences manifest in behavior of panhandlers, too. In DC it makes a huge difference in terms of modeling motivations and rationale.

  2. This is an interesting street-level exploration of survival issues equally important to charitable organizations, as hinted by the AEI citation. The rationales hypothesized might be summarized as 1) how to identify potentially sympathetic benefactors, 2) how to allocate scarce fund raising resources, and 3) maximization of return by conservation of overall effort. It would be interesting to find out how well-funded IRC 501(c)(3) organizations manage these issues.


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