What Happens When You Give Money to Panhandlers? The Case of Downtown Manhattan

Abstract

We study panhandling in Downtown Manhattan. Surprisingly few people panhandle there at any given moment: about 8-10 people on average at a busy time, in a small area with an economy the size of Latvia’s. The redevelopment of Ground Zero and the resulting surge in economic activity—including the opening of North America’s tallest building—changed where panhandlers operated within the neighborhood, but did not significantly increase panhandling overall. The response was muted because the labor supply of panhandlers appears to be inelastic. On the other hand, good places to panhandle are relatively abundant. Hence the benefits of the boom in economic activity accrued mainly to incumbent panhandlers themselves; as would the benefits of greater donor generosity.