C. W. Von Bergen & Martin S. Bressler

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An Uncomfortable Truth: Helping Others Sometimes Hurts Them

C. W. Von Bergen & Martin S. Bressler

Southeastern Oklahoma State University

Abstract

Despite recent calls for increased levels of helping the needy and underprivileged, benevolence in the form of aid, favors, or other pro-social behaviors may have downsides and adaptive costs that come with very real losses that are frequently overlooked. This is often due to kindness which, over time, frequently results in aid recipients’ entitlement and dependency that often worsen the very concerns that were meant to be alleviated by the assistance provided in the first place. Thus, it is important not to allow peoples’ honorable intentions in helping others blind individuals to the fact that real injury may be done—not the good envisioned. Examples of the corrosive effects of help are discussed in a variety of fields. Having “skin in the game” and providing autonomy-oriented help as practiced by Habitat for Humanity is offered as a possible antidote to these destructive effects.

An Uncomfortable Truth: Helping Others Sometimes Hurts Them

A boy spent hours watching a caterpillar struggling to emerge from its cocoon.
It managed to make a small hole, but its body was too large to get through. After a long struggle, it appeared to be exhausted and remained absolutely still. The boy decided to help the caterpillar and with a pair of scissors he cut open the cocoon, thus releasing it. The caterpillar fell to the ground but its body was very small and wrinkled and its wings were all crumpled. The boy continued to watch hoping that at any moment it would open its wings and fly away. But nothing happened; in fact, the butterfly spent the rest of its very brief life dragging around its shrunken body and shriveled wings, incapable of flight.

—Adapted from Bliss and Burgess (2012)

Wondering what happened, the boy’s mother took him to a local university and learned that the caterpillar was supposed to struggle as a way of acquiring its wings and to achieve its destiny to become a butterfly. In fact, they were told, the caterpillar’s struggle to push its way through the tiny opening of the cocoon drives the fluid out of its body and into its wings. Without the struggle, the caterpillar would never, ever fly because squeezing out of that small hole was Nature’s way of preparing its wings for flight. Despite the boy’s kindness and his eagerness to help, his good wishes and virtuous behavior actually irreparably damaged the caterpillar and the boy innocently killed that which he was trying to help.

Like the butterfly struggling to emerge from its cocoon, individuals’ efforts for self-sufficiency and development can be short-circuited by compassionate intervention. This can happen when aid weakens the incentives for individuals to help themselves which leads aid recipients to be in or remain in a condition requiring assistance (Ellerman, 2004; Gronemeyer, 1992). Over time help becomes a reward for staying in the state of needing aid and creating dependency, entitlement, loss of personal initiative, eroding work ethic, and learned helplessness (Murray, 1984). In some cases receiving help may threaten people’s personal self-esteem because it can imply their inferiority relative to the helper (Nadler, 1991, 1998; Nadler & Fisher, 1986; Nadler, Fisher, & Ben-Itzhak, 1983), while also undermining their confidence and motivation to succeed (Fisher, Nadler, & Whitcher-Alagna, 1982). Offering assistance may generate seriously negative effects in aid recipients including loss of self-reliance, feelings of discomfort and obligation, decrements in social status, and derogations of the donor and the aid received (Fisher, DePaulo, & Nadler, 1981). Like in the opening vignette, sometimes providing aid, even with the best of aims, can be problematic.

Our goal is to open up perspectives as much as analyzing facts and to bridge the chasm between the rhetoric and the reality of aiding the needy. We recognize that those who question benevolence will not win many popularity contests and in some ways we feel somewhat uncomfortable by suggesting that helping others may actually hurt them. In part this is because in U.S. culture giving and providing aid are often viewed as monolithically positive, nearly sacred qualities beyond reproach with negligible tradeoffs, whether or not the assistance is genuinely beneficial (Oakley, Knafo, & McGrath, 2012). “It’s the thought that counts,” as the saying goes, when discounting negative consequences of giving, assisting, and helping the less fortunate.

We are not trying to discount the importance of donating or providing aid to others but to address those who have extolled its value without realistically considering when such actions contain the potential for harm. Our aim is to foster more productive patterns of giving. The major implication of this review is not a call for a reduction of aid, help, and care but rather an appeal for rethinking strategies for assisting others and to shift frames of reference to include the possibility that giving to and helping others may inflict costs. Sometimes help is truly facilitating and at times, particularly in the long-run and if repeatedly provided, it contributes to inadvertent injury mainly due to the detrimental effects of entitlement dependency, and narcissism which appear to be increasing in U.S. society (Twenge & Campbell, 2009). Over time individuals receiving such aid often become inveterate takers. Accordingly, the scope of this paper is limited to sustained, long term help to the needy rather than lifesaving help in times of catastrophe. Igneski (2008) argues that the duty to rescue is a special type of obligation to aid and not the toxic generosity that often evolves with prolonged, repeated assistance.

The morally tidy narrative that aiding others is an unmitigated good and lack of assistance is unequivocally bad must receive a more nuanced assessment. Again and again, one finds benevolent aid being defended as “doing good” in the sense of delivering resources to the needy without any real recognition as to how it can undercut and weaken incentives for developing self-reliance and autonomy—key American values (Baker, 2014)—in aid recipients.

Hence, this review aims to encourage a thoughtful consideration of the possibility that giving, helping, and assisting, unless temporary and not endlessly repeated, will tend to undermine individuals’ capacity for helping themselves and destroy personal initiative. Lupton (2011) voiced such a concern when he said that “Giving to those in need what they could be gaining from their own initiative may well be the kindest way to destroy people” (p. 69). Indeed, “most external help actually overrides or undercuts the budding capacity for self-help and thus ends up being unhelpful” (Ellerman, 2007, p. 562).

We define giving quite broadly to include prosocial attitudes, traits, and behaviors. Behaviors themselves can range widely from informal support and care to formal giving experiences such as volunteering. What each of these has in common is that they are all focused on increasing others’ well-being (Konrath & Brown, 2013). In our analysis we explore the dynamics of helping by first noting the increased calls for societal compassion, altruism, and assistance. We then discuss how eleemosynary aid to relieve symptoms of maladies may create a situation of moral hazard that weakens incentives and attenuates efforts for positive change to eliminate such difficulties. Several areas where help may be hurting aid recipients are next presented as exemplars of assistance that highlight problematic aspects of giving and helping. We then offer a model of helping based on individuals having “skin in the game” as exemplified by Habitat for Humanity (n.d.). We conclude with a summary.

Calls for Help, Assistance, and Other Prosocial Behavior

Over the millennia moral philosophers, cultural pundits, and spiritual thinkers have written positively about acts of charity, mercy, and kindness in the context of the ethic of beneficence (Stanford Encyclopedia of Philosophy, 2013) and more recently within the ethics of care (Gilligan, 1987). Some philosophers have asserted a moral obligation/duty to assist people in need (Herman, 1996; Kant, 1969 [1785], Singer, 1972; Unger, 1996). Beneficent actions and motives have traditionally occupied a central place in morality because they connote doing good. Most ethical theory has embraced various aspects of beneficence, and utilitarian theorists see generosity as the foundation for creating the greatest benefit for all. Common examples today are found in social welfare programs, philanthropy, scholarships for needy and meritorious students, disaster relief, programs to benefit children, the disabled, and the incompetent, and preferential hiring and higher educational admission policies and practices.

More recently social scientists likewise have emphasized the importance of compassion in social life and have called for increased demonstrations of altruism, giving, grace, and prosocial acts toward those in need (e.g., Dutton, Workman, & Hardin, 2014; Frost, 1999; Fryer, 2013; George, 2014; A. Grant, 2013; K. Grant, 2008; MacAskill, 2015; Nussbaum, 2001; Post, 2003; Seppälä, 2015; Singer, 2015). Keltner (2008) goes a step further, arguing that humans have evolved to be compassionate. Beneficence toward those less fortunate, assisting people in need, demonstrating kindness to others, generosity, and trying to relieve individuals’ grief and misery through help, aid, favors, and donations is often portrayed as one of society’s main moral duties (Salter, 2008). Indeed, some individuals find it disturbing to question the value of compassion, altruism, charitable giving, and other prosocial behaviors and seem to suggest that these qualities be revered without question (Center for Compassion, n.d.; Oakley, 2013).

Additionally, a global community of scholars, writers, specialists, and teachers interested in demonstrating the well-being benefits of positive traits, states, and experiences has recently emerged including the Greater Good Science Center at the University of California at Berkeley, the Center for Compassion and Altruism Research and Education at Stanford University, the Compassion Lab at the University of Michigan, the Centre for Positive Psychology at the University of Melbourne, the Well-Being Institute at Cambridge University, The Centre for Effective Altruism at Oxford, and the Optentia Research Programme in South Africa. Such groups have promoted increased giving, helping, and compassion (e.g., Fryer, 2013) and find it disturbing to question the value of compassion, altruism, and charitable giving, and seem to suggest that these qualities be revered without question (Center for Compassion, n.d.; Oakley, 2013).

The appeals of such institutes are aimed at ultimately increasing “helping behaviors”, “caring behaviors”, and “altruism” (Brief & Motowidlo, 1986) that commonly includes kindness, generosity, nurturance, care, altruistic love, compassion, and “niceness” demonstrated by doing favors for others, helping them, and taking care of them (Armstrong, 2010; Park & Peterson, 2006; Park, Peterson & Seligman, 2004; Peterson, 2006). Nadler (2002) suggests that helping others is a positively valued behavior in most, if not all, human societies, and is said to flow directly from our common sense of community and dignity.

Moreover, the work of such researchers and practitioners, as they attend to big and small suffering, has overwhelmingly concentrated on persons who provide help rather than persons who receive it. Comparatively little research has been devoted to the effect of aid on recipients (for an exception, see Nadler, 2015). It is often assumed that helping is constructive and beneficial and that beneficiaries of aid are grateful for the help received (Fisher et al., 1981; Zarri, 2013). These scientists have identified a host of ways in which charitable behavior can lead to benefits for the giver, whether economically via tax breaks (Clotfelter, 1997; Reece & Zieschang 1985), socially via signaling one’s wealth or status (Glazer & Konrad 1996; Griskevicius et al., 2007) or psychologically via experiencing well-being from helping (Andreoni, 1990; Dunn, Aknin, & Norton, 2008; A. Grant, 2013; Post, 2011). Coming from a different perspective, researchers have also examined the costs (e.g., compassion fatigue; burnout) of helping and caring on aid providers who assist the needy and the traumatized (Flynn, 2003; Portnoy, 2011).

Hidden Costs of Helping

The focus on positive effects on donors of helping others has obscured problematic effects of prosocial elements on aid receivers because oftentimes such programs are designed and implemented with little awareness that helping may have detrimental effects (Corbett & Fikkert, 2014; Nadler, Fisher, & Streufert, 1976); that is, well-meaning initiatives wind up hurting the parties they were designed to help because people have little understanding of the negative impact of their good deeds. Other studies have noted that receiving social support has been associated with increased depression, feelings of guilt, and feelings of dependency in correlational studies (Liang, Krause, & Bennett, 2001; Lu, 1997; Lu & Argyle, 1992). Furthermore, in a 5-year longitudinal study that controlled for a number of potential alternative explanations (e.g. age, gender, physical health, health risk behaviors, personality traits), there was a 30% increase in mortality for individuals who reported receiving practical support from friends and family members at the beginning of the study (Brown, Nesse, Vinokur, & Smith, 2003).

Many such efforts have undoubtedly been motivated, in part, by noble intentions and a sincere desire to help those thought to be underprivileged. Nevertheless, helping may not be constructive because of the very old idea that the best form of assistance is to help people help themselves. Most are familiar with the ancient Chinese saying that if people are given a fish, they are fed for a day, but if they are taught how to fish they can feed themselves for a lifetime (Alvarez & van Leeuwen, 2011; Ellerman, 2005; Nadler, Halabi, Harpaz-Gorodeisky, 2009). Giving people fish is a temporary palliative that in the absence of meaningful behavior on the recipient’s part is likely to impede rather than promote their growth and development.

More recently, Nadler’s model of intergroup helping, (Nadler, 1997, 1998, 2002; Nadler & Halabi, 2006) distinguishes between autonomy-oriented and dependency-oriented help. Dependency-oriented help provides a full solution to the problem, is less concerned with the recipient’s autonomy, and reflects the helper’s view that the needy cannot help themselves. In contrast, autonomy-oriented help is partial and temporary, it is aimed at empowering the disadvantaged and assumes that, given the appropriate tools, recipients can help themselves and live autonomous independent lives (Igneski, 2008). Similarly, Dewey and Tufts (1908) indicated that “The best kind of help to others, whenever possible, is indirect, and consists in such modifications of the conditions of life, of the general level of subsistence, as enables them independently to help themselves” (p. 350). These perspectives do not entail an obligation to make people as happy as possible but a concern about providing persons with the tools they need to make themselves happy. Thus, providing instrumental autonomy-oriented help is advised for long term constructive recipient behavior.

Ongoing help, however, may cause unintentional harm because of unwholesome dynamics and pathologies that fester under the cover of kindheartedness. The point is not to oppose these activities but to point out how benevolence often operates in the longer term to erode the aid recipients’ incentives to help themselves—thus creating dependency relationships and unhelpful help or, in the words of Ellerman (2005), “Charity corrupts; long-term charity corrupts long term” (p. 12). Such long-term aid, instead of enabling self-help, creates a perverse dependency-creating alternative to self-help. This happens despite helping activities often being perceived as reflecting good intentions. Noble motives, however, do not always translate into valuable outcomes. Smith (2008) cautions against judging by intentions alone with a dramatic example: “Hitler and his Nazi Party firmly believed that they were helping all mankind [sic] by killing all Jews, Slavs, gypsies, and homosexuals so as to ‘purify the Aryan race’” (p. 11).

Additionally, recent research indicates that virtues across a wide number of domains can wreak havoc in the long-run and at high levels can have antithetical consequences on well-being and/or performance (Breeden, 2013). In many areas one finds that seemingly virtuous behavior may be problematic. Grant and Schwartz (2011), for example, document the deleterious effects of such honorable virtues as gratitude, forgiveness, hope, caring, kindness, generosity, volunteering, and empathy. In a particularly poignant medical example Groopman (2007) failed to diagnose a life-threatening infection in a hospitalized cancer patient because his empathy for the patient’s discomfort in the face of grueling chemotherapy induced him not to ask his patient to roll over and be examined for bedsores—thereby hastening his patient’s death. Thus, to say that helping is an absolute good may simply be painting with too broad a brush and that attempts to assist others sometimes come with impairments and can have tradeoffs that worsen the very concerns that were meant to be eased.

Accordingly, in determining whether aid of any given type is beneficial, individuals (and governments) must consider whether it is likely to significantly increase the number and worsen the condition of beneficiaries of aid. All too often heartfelt efforts to help are in reality salving people’s own consciences without fully examining the impact on those they seek to help. In a culture such as the U.S. that places high value on kindness, empathy, charity, and altruism and for those who treat these concepts as sacred such views may cognitively blind individuals to its harms (Haidt, 2013). Without approaching kindness interpreted as helping others with a healthy dose of mindfulness (e.g., Davis & Hayes, 2011), individuals often become blind to the ways such a virtue can sometimes hurt people. These individuals may be inclined to believe that if there are negative effects of helping then surely it is an aberration. Rather than being an anomaly, however, helping can be problematic because of the well-known phenomenon called moral hazard.

Moral Hazard
Broadly speaking, moral hazard occurs when one party has a tendency or incentive to behave inappropriately; i.e., people who have a reasonable expectation of altruists assisting them in case of need often alter their own behavior to shift the costs of preventing needs onto altruists (Browne & Hoyt, 2000; Einav, Finkelstein, Ryan, Schrimpf, & Cullen, 2013; Schwarze & Wagner, 2004). Moral hazard, sometimes referred to as charity hazard (Browne & Hoyt, 2000) or disaster syndrome (Kunreuther, 2000), posits a downside to private or public help or aid because recipients may begin to rely on free aid and others’ assistance, instead of their own efforts. Essentially, the anticipation of aid crowds out self-protective activities because individuals do not take appropriate action to help themselves because of expected governmental or private assistance.

A system whereby relief or aid is given to the worst off may create moral hazard because people or institutions receiving help for being worst off have less incentive to improve. Moral hazard problems arise whenever individuals’ behavior is affected because they are protected from the consequences of their actions. Moral hazards are encountered every day: tenured professors have secure jobs and poor teaching or research have little or no career consequences; people with auto theft insurance are less vigilant about where they park; salaried salespeople take long breaks, and so on.

The Samaritan’s dilemma

A specific example of a moral hazard is the Samaritan’s dilemma derived from the Biblical story of the “Good Samaritan” (Luke 10:29-37, New International Version). In traveling from Jerusalem to Jericho, the Samaritan (the altruist) assisted a person who had been robbed and beaten by thieves. Under the circumstances of this event, the Samaritan is properly lauded for his exemplary conduct. However, an unintended consequence of such generosity is that it may induce adverse behavior of other potential aid recipients. Buchanan (1975) illustrated that if the Samaritan decides to assist more unlucky travelers, other journeyers would likely take less care to avoid thieves and other hazards.

In short, the Samaritan’s dilemma arises whenever the extension of aid increases the number of situations requiring aid. Thus, the Samaritan’s dilemma is a pervasive problem as people respond to those in “need.” Buchanan (1975) indicated that “we may simply be too compassionate for our own well-being or for that of an orderly and productive free society” (p. 71) and that such altruism, if left unchecked, would have catastrophic consequences for the human race as a whole.

Interestingly, even thinking about help from others goals can have adverse consequences. For example Fitzsimons and Finkel (2011) randomly assigned American women who cared a great deal about their health and fitness to think about how their spouse was helpful, either with their health and fitness goals or for their career goals (control group). Women who thought about how their spouse was helpful with their health and fitness goals became less motivated to work hard to pursue those goals. Relative to the control group, these women planned to spend one-third less time in the coming week pursuing their goals. This research illustrated what Fitzsimons and Finkel (2011) call “self-regulatory outsourcing” (p. 369) in which considering how others can be helpful for a given goal undermines motivation to expend effort on that goal. It seems that when people think about how someone else can help them, they unconsciously “outsource” effort to their prospective helper, relying on them for future goal progress, and, consequently, exerting less effort themselves.

Should an individual permit a neighbor readily to borrow groceries or tools if this is likely to encourage the neighbor to be in chronic need of assistance in the future (Wagner, 1989)? Does extending an unemployment benefit create an incentive not to work, or is it the humane thing to do in a harsh job market? Does a potential aid recipient increase his or her risk of becoming impoverished because they know that a benevolent government will step in to provide relief? Such helping, gifting, or assisting can over time be problematic because it may create a moral hazard. We now present several scenarios where helping is toxic because of moral hazard. These settings are taken from a number of diverse areas and are presented to illustrate the ubiquity of the phenomenon and are not intended to be exhaustive.

Where Helping May Be Hurting

The sometimes unforeseen misfortunes of assistance are explored here by examining several areas where benevolence may be problematic for recipients of aid. In such areas—affirmative action, the Native American experience, home ownership, welfare, foreign aid, inheritances and intergenerational transfers, and gambling—helping people (or organizations) repeatedly in the short run may create pernicious effects that damage them in the long run. In moral hazard terminology, such assistance over time diminishes incentives for the needy to reduce risk and undertake agentic behavior because of the anticipation, indeed, expectation, that help will be provided by others. That effects can change over time is not a new concept. Rousseau’s analysis in Book I and II of Emile described the change in causality in children crying: “The first tears of children are prayers. If one is not careful, they soon become orders. Children begin by getting themselves assisted; they end by getting themselves served” (1979 [1762], p. 66). More recently Lupton (2011) noted the following progression: giving once elicits appreciation; giving twice creates anticipation; giving three times generates expectations; giving four times produces entitlement; and giving five times establishes dependency.

Affirmative action

To level the playing field for job applicants or employees and to demonstrate support for equal opportunity organizations around the globe have implemented affirmative action plans (AAPs) which are policies designed to improve work and educational outcomes for underrepresented groups by providing them with extra help (Sowell, 2005; Yang, D’Souza, Bapat, & Colarelli, 2006). AAPs are designed to facilitate a transition to more equal relations between ethnic and racial groups and to assist the less advantaged to realize their potential and attain equality, and thus help promote organizational and institutional diversity and redress societal injustice (Turner, Pratkanis, & Hardaway, 1991). It is perhaps the most important antidiscrimination technique ever instituted in the United States and has had a demonstrable effect on discrimination (Turner & Pratkanis, 1994).

Nevertheless, AAPs are not without drawbacks. Although important in achieving such goals, these programs have, nevertheless, been criticized as amplifying the targeted group’s dependence and inferiority that is implied by reliance on another’s assistance (Nadler & Fisher, 1986; Riley, 2014).H This perpetuates rather than corrects social inequality (Niemann & Dovidio, 2005; Pratkanis & Turner, 1996). These procedures can also stimulate backlash among non-beneficiaries who may feel unfairly disadvantaged by these policies (Harrison, Kravitz, Mayer, Leslie, & Lev-Arey, 2006; Shteynberg, Leslie, Knight, & Mayer, 2011). In addition, AAPs can cause the very employees they are intended to benefit to be stigmatized as incompetent by both others and the self (e.g., Heilman, 1994; Leslie, Mayer, & Kravitz, 2014).

Specifically, the presence of AAPs raise the possibility that members of the groups the AAP targets were hired due to their demographics, not their qualifications. Scholars have theorized that others therefore discount the possibility that AAP targets are competent (e.g., Garcia, Erskine, Hawn, & Casmay, 1981; Heilman, Block, & Lucas, 1992) and, in a parallel fashion, that AAPs and the associated possibility that demographics played a role in selection cause AAP targets to doubt their own self-competence (e.g., Heilman, Simon, & Repper, 1987; Niemann & Dovidio, 2005). Perceived incompetence likely results in poor performance outcomes (e.g., Heilman & Alcott, 2001) leading Steele (1990) to indicate that “…Preferential treatment, no matter how justified in the light of day, subjects blacks to a midnight of self-doubt, and so often transforms their advantage into a revolving door (pp. 117-118). Programs awarding preference according to race or sex are also opposed on the grounds that they cause much more harm than good because such preferential treatment programs encourage dependency and reward people for identifying themselves as victims providing them no incentives to become self-reliant or to develop the skills necessary to succeed in the work place or classroom (Eastland & Bennett, 1979; Howard & Hammond, 1985).

Affirmative action in higher education, intended to address past discrimination, has resulted in fewer black college graduates—particularly in the fields of math and science—that were experienced in the absence of racial preferences (Riley, 2014). Similarly, Sander and Taylor (2012) argue that race-based admissions preferences for minority students lead to “mismatch” between students and universities. As a result of race-based preferences, students are admitted to more selective schools than they otherwise would be based on their academic credentials alone. Once enrolled at these more prestigious schools, the students fall behind and are less likely to finish. This “mismatch” effect, the authors contend, then cascades down all tiers of higher education, with the harmful effects becoming more pronounced at each successive tier.

Such AAPs reinforce ugly stereotypes of, for example, black inferiority and the pernicious notion that blacks are not academically talented which causes significant long-term harm. Affirmative action policies that initially said people must be judged without regard to race and sex evolved into policies that required the consideration of those characteristics leading Thomas Sowell, an American economist, social theorist, political philosopher to state, “I simply do not see the justice in making people who are badly off worse off, in the name of advancing them” (1983; see also Sowell, 2005).

In summary, to the extent that AAPs and the associated stigma of incompetence limit targets’ performance, AAPs may have the opposite of their intended impact. Thus, the benevolent intention that underlies affirmative action programs may be misconstrued and lead to increased tensions between the advantaged group that initiated them and the disadvantaged groups which are its intended beneficiaries. The charitable intentions directed towards one particular disadvantaged U.S. population segment, Native Americans, are now presented.

The Native American experience

In a highly controversial story, journalist John Stossel reported that Native Americans have been “helped” by the government more than any other group, yet struggles more than any other group. Stossel (2011) reported that almost 25% of Native Americans live in poverty and 66% are born to single mothers. On some reservations, the poverty rate is 50% and higher. This, despite almost $13 billion spent across 20 federal government programs every year. On the other hand, Stossel points to examples of successful Native Americans not living on the reservation outperforming Natives living on reservations.

Increasing welfare payments may actually increase poverty levels. A study by Guedel (2014) of two dozen Native American gaming tribes located in the states of Washington, Oregon, Idaho, and Alaska found that growing tribal gaming revenues can make poverty worse. Between 2000 and 2010 casinos owned by those tribes doubled their total annual take in real terms to $2.7 billion. From an economic perspective, it would seem reasonable to expect the infusion of new capital provided by tribal gaming to be a catalyst for poverty reduction, and likewise expect to see the individual and collective poverty percentages for tribes decrease. On a collective basis, the actual results for these northwestern tribes demonstrated the opposite: an inverse correlation between per capita payments (in which tribes distribute casino profits directly to tribal members) and poverty reduction. Of the 17 tribes in the study that dispersed cash from casinos directly to members, ten (58.8%) saw their poverty rates rise. Of the seven tribes that did not provide per capita payments to members, only two saw a poverty increase. In tribes with high unemployment and poverty, per capita payments are often viewed as a means of collective support by and for tribal members, with each member eligible for an equal share of tribal wealth.

It appears that per capita payments for poverty reduction in Native American communities—which some have likened to a welfare-type system—provided a disincentive for work and dissipated tribal economic resources that could be better used to finance strategic initiatives such as scholarships for higher education (McGee, 2013). Indeed, Native American Ron Whitener, law professor, tribal judge, and a member of the Squaxin Island Tribe indicated: “These [per capita] payments can be destructive because the more generous they become, the more people fall into the trap of not working” (Payne, 2015).

Home ownership

More recently, well-meaning governmental policies to enact the American Dream of homeownership in the 1990s and early 2000s allowed less-than-qualified individuals to receive housing loans and encouraged more-qualified buyers to overextend themselves. Typical risk-reward considerations were disregarded because of implicit government support (Acharya, Richardson, van Nieuwerburgh, & White, 2011). As a result, homeownership for such historically “underserved” borrowers increased significantly; yet when economic conditions deteriorated, many lost their homes or found themselves with properties worth far less than they originally had paid, and taxpayers were left with trillion-dollar costs and a prolonged economic crisis.

Essentially, with the noblest of purposes, a permissive lending environment was created in which people were given too much money to buy houses they could not afford, resulting in catastrophic damage. The good intentions inherent in such “feel good,” emotionally-based practices frequently follow short-term, superficial heuristics for helping others that are often implemented without a critical, in-depth analysis of costs. An initial snap, common-sense judgment about what seems right in helping others can gel quickly into formidable certitude without consideration of important relevant facts. An awareness of the insidious effects of giving and helping could have facilitated better regulation in order to mitigate its costs and enhance its benefits. There may have been significant advantages for all U.S. citizens if some had been told “no.”

Welfare: Individual and corporate welfare

Welfare for individuals. Sometimes there are detrimental long-term effects on American families because of many well-intentioned welfare programs (Funiciello, 1993; Voegeli, 2010). This appears to be a long-lasting issue and is endemic in government programs to assist the poor. Hazlitt (1971), for example, describes two lessons that can be drawn from the effects of welfare in ancient Rome: “The first is that once the dole or similar relief programs are introduced, they seem almost inevitably to get out of hand. The second lesson is that once this happens, the poor become more numerous and worse off than they were before, not only because they have lost self-reliance, but because the sources of wealth and production on which they depended for either doles or jobs are diminished or destroyed” (p. 219). In short, in collectively assisting the needy through government handouts, the number of the poor increased because work incentives were adversely affected.

As a more recent example, consider that Congress initiated cuts in welfare by passing The 1996 Welfare Reform Law (also known as The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 [PRWORA]) amid predictions that it would result in substantial increases in destitution, hunger, and other social ills. For example, Senator Daniel Patrick Moynihan (D-NY) proclaimed the new law to be “the most brutal act of social policy since reconstruction” (Huffington, 1996). He predicted, “Those involved will take this disgrace to their graves” (Welfare as They Know It, 2001, p. A14). However, in a six year evaluation of this welfare reform law Rector and Fagan (2003) noted that overall poverty, child poverty, poverty of single mothers, and child hunger declined substantially. Employment of single mothers increased dramatically, and welfare rolls plummeted. The share of children living in single-mother families fell, and the share of children living in married-couple families grew, especially among black families. Pardue (2003) observed that black child poverty declined from 41.5% to 30% in this six year period—the biggest decline in recorded history. Cutting welfare payments, led to decreased levels of poverty suggesting that the government had induced otherwise able-bodied people to become dependent on welfare.

Interestingly, PRWORA also cut eligibility to Medicaid for noncitizen immigrants. Borjas (2003) found, contrary to expectations, that health insurance coverage among noncitizen immigrants increased after their eligibility for Medicaid was reduced—an effect that could not be explained by the robust economy of the 1990s. Borjas argued that affected immigrants increased their work effort and found jobs with health benefits.

We are in agreement with U.S. founding father, Benjamin Franklin who said some 250 years ago: “I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer” (Franklin, 1766).

Corporate welfare. It makes sense to bail out bankrupt banks and avoid financial meltdown in the economy, but if governments offer this guarantee then banks have a greater incentive to take risks knowing they will get bailed out. Some hold that certain financial institutions are so large and so interconnected that their failure would be disastrous to the economy—and they therefore must be supported by government when they face difficulty. The colloquial term “too big to fail” has been used to describe this situation (Lin, 2010). By declaring a company too big to fail means that the government or central bank may step in and help these institutions if they get into financial trouble.

Financial bailouts of lending institutions by governments, central banks or other institutions can encourage risky lending in the future if those that take the risks come to believe that they will not have to carry the full burden of potential losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the highest return. So-called “too big to fail” lending institutions can make risky loans that will pay handsomely if the investment turns out well but be bailed out by the taxpayer if the investment turns out badly.

Taxpayers, depositors, and other creditors often have to shoulder at least part of the burden of risky financial decisions made by lending institutions (Wilson, 2009). According to the World Bank, of the nearly 100 banking crises that have occurred internationally from 1980 to 2000, all were resolved by bailouts at taxpayer expense (Boyd, Gomis, Kwak, & Smith, 2000).

As former Federal Reserve Bank chairperson, Ben Bernanke (2010), indicated, “If creditors believe that an institution will not be allowed to fail, they will not demand as much compensation for risks as they otherwise would, thus weakening market discipline; nor will they invest as many resources in monitoring the firm’s risk-taking. As a result, too-big-to-fail firms will tend to take more risk than desirable, in the expectation that they will receive assistance if their bets go bad.”

While government bailouts or intervention might help a company survive (e.g., Chrysler), some opponents believe it is counterproductive to help companies that deliberately take high-risk high-return positions because they are able to leverage these risks based on the governmental policy preferences they receive (Drew, 2009; Gup, 2003). Some critics, such as former Federal Reserve chair, Alan Greenspan, believe that such large organizations should be deliberately broken up: “If they’re too big to fail, they’re too big” (McKee & Lanman, 2009). More than fifty prominent economists, financial experts, bankers, finance industry groups, and banks themselves have called for breaking up large banks into smaller institutions (The Big Picture, 2013). Relatedly, Suarez (1994) showed that the threat of being closed can be seen as “an effective way to induce the bank to be prudent when the present value of its future rents is sufficiently high” (p. 24) from which he infers that the optimal strategy for a central bank is to commit credibly to withdrawing the bank’s charter in case of bankruptcy. It appears that when people and firms are protected from the consequences of their behavior then bad things often happen.

Foreign aid

Foreign aid has often presented more challenges than opportunities to aid-receiving countries (Ear, 2013; Kennedy, 2004). There have been small improvements across the globe, from reducing poverty to slowing population growth to curing and preventing diseases, but the impact from aid has not been proportionate to the amount of money donated.

Foreign aid’s biggest downside is that frequently there is no clear, effective system put in place to hold aid recipients and their governments accountable for resources illegally taken from public sector coffers—a long-standing, and still very present, trend from Asia to Africa to Latin America/Caribbean to Europe. Unfortunately, the absence of that system reinforces social inequities and perpetuates cycles of political abuse that has led to a sophisticated new form of authoritarianism—one that empowers the elite few, while keeping a majority of people in abject poverty. Some 30 years ago Bovard (1986) argued convincingly that the success of foreign aid is often measured by intentions, not results. Using the U.S. as one example, Bovard (1986) indicated that “[F]oreign aid has routinely failed to benefit the foreign poor…[and] the U.S. Agency for International Development [USAID] has dotted the countryside with ‘white elephants’…the biggest…of them all—a growing phalanx of corrupt, meddling, and overpaid bureaucrats” (p. 1).

It seems that foreign aid might create perverse incentives and undermine the development of sound institutions in the recipient countries in part because large amounts of aid delivered to low-income countries with poor institutions and governance can create a cycle of aid dependence where the recipient government begins to rely considerably on foreign sources to perform key operational and fiscal tasks. Alternatively, it could refer to a situation where the recipient government is discouraged from expending any efforts towards inducing development because it anticipates that foreign assistance is on the way. Indeed, foreign aid supplies large amounts of unearned capital to governments in a windfall-type manner (Nager, 2013).

Such behavior is essentially motivated by the fact that recipient governments continue to receive development assistance even if they have made no concerted efforts to effectively utilize received funds. In fact, such guarantees can potentially induce ‘moral hazard’ behavior on the part of recipient governments, where they may pursue unproductive policies that are more likely to encourage agencies to continue funding. For example, the anticipation of charity in the case of a large-scale disaster might prompt governments to diminish protection (Buchanan, 1975; Coate, 1995) since “… current decisions of economic agents depend in part upon their expectations of future policy actions” (Kydland & Prescott, 1977, p. 474).

Even the World Bank has conceded that in countries with weak institutions, “the Bank’s interventions may have delayed the development of effective, self-reliant cadres and institutions” (Kapur, Lewis, & Webb, 1997, volume 1, p. 421). The essential problem with this intervention is that there are no consequences associated with poor efforts from the recipient government. As a result of this phenomenon, beneficiary governments have weak incentives to efficiently utilize received funds, and generate sustainable development.

In the recipient country, aid dependence can impact institutions by weakening institutional capacity, siphoning off scarce talent from the bureaucracy, diminishing accountability, encouraging rent seeking and corruption, fomenting conflict over control of aid funds, and alleviating pressures to reform inefficient policies and institutions. For instance, a resident of Equatorial Guinea described his country’s neglect of facility maintenance: “Everything is given to them; they don’t take care of anything and don’t have to” (Klitgaard, 1990, p. 98). When vulnerable groups are exposed to the international relief system, the end result may be the wholesale destruction of a culture. Despite over $2 trillion provided to Africa over the last 50 years, former World Bank consultant Dambisa Moyo, a native of Zambia, indicated such aid has resulted in measurably worsened outcomes in a broad variety of areas, supporting despotism and increasing corruption and a sense of dependency in Africans (Moyo, 2009).

The idea that foreign aid often hurts, rather than helps, poor people in poor countries was observed by economist and 2015 Nobel prize winner, Angus Deaton. Deaton (e.g., 2013) observed that in order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders do not deliver the basic services they promise, the people have the power to remove them. Foreign aid (especially to countries where they get an enormous amount of aid relative to everything else in that country) can weaken this connection and change the relationship between a government and its people, leaving a government less accountable to its people, the congress, or parliament. Governments that get much of their money from aid do not have to be answerable to their constituents and consequently makes them more despotic. It can also increase the risk of civil war, since there is less power sharing, as well as a lucrative prize worth fighting for. All this leads to corrosive effects and general economic decline as Deaton has observed in countries as Zaire, Rwanda, Ethiopia, Somalia, and Biafra. [To be fair, Deaton believes that certain types of health aid— offering vaccinations, or developing cheap and effective drugs to treat malaria, for example—have been hugely beneficial to developing countries.] Consistent with this analysis, Rajan and Subramanian (2005) observed that much foreign aid flowing into a country tended to be correlated with lower economic growth and that countries that receive less aid tend to have higher growth, while those that receive more aid have lower growth.

Another perspective also finds that aid may negatively impact countries. It seems that reductions in foreign aid, while initially difficult, may over the long run be beneficial. For example, the end of U.S. aid—which had been generous in the 1950s—is often credited for the Korean and Taiwanese economic turnarounds of the 1960s (Rodrik, 1996). Foreign aid, it seems, has largely encouraged Third World governments and their populations to rely on hand-outs instead of on themselves for development thus again demonstrating the corrosive effects of help. Echoing this sentiment is one of the world’s best known philanthropists and rock band U2 lead singer, Bono, who said “Aid is just a stopgap. Commerce [and] entrepreneurial capitalism takes more people out of poverty than aid. We need Africa to become an economic powerhouse” (Theroux, 2013).

Inheritances and intergenerational transfers and gambling

Inheritances. That sudden, unearned wealth can have deleterious effects is well known. Nearly every culture has some version of the axiom “from shirtsleeves to shirtsleeves in three generations,” dating back to China over 2000 years ago. The proverb describes how the first generation works hard to create a fortune; the second generation enjoys its spoils, substituting hard work with entertainment, and the third generation—with no role model to follow—squanders what remains of the fortune, relegating their children to starting the process over again. Sullivan (2013), for example, found that 70% of an affluent family’s wealth is typically gone by the end of the second generation, and 90% is destroyed by the end of the third. Psychologists specializing in “sudden wealth syndrome” (Schorsch, 2012) acknowledge that heirs, like lottery winners, tend to squander their sudden fortune.

Having been born into money, they may also expect that their financial support will continue. The sense of cause and effect between management of their assets and returns is not inherited; it must be developed. Thus, each new family owner must develop a sense of fiduciary responsibility, an understanding of his or her role, a realistic expectation of return, an understanding of risk, and be willing to be part of relevant decisions. A strong sense of entitlement usually leads to unrealistic expectations and conflict with reality. Additionally, there is frequently a lack of personally and socially beneficial purposes guiding the use of inherited wealth. O’Neil (1997) documented how money transferred to heirs without a meaningful purpose leads to negative character qualities, such as the inability to delay gratification, unwillingness to tolerate frustration, feelings of failure, and a false sense of entitlement.

Members of wealthy families are often concerned that their family wealth not “spoil” their heirs (Dashew, 2002; Goldbart, Jaffe, & DiFuria, 2003) and that their children and grandchildren will “end up lazy, good-for-nothings” (Baron & Lachenauer, 2014) who do not contribute to society. Yet their children, growing up with such privilege find it difficult to develop a sense of responsibility to work to expand the family’s portfolio, or even a sense that such a task is worth doing. The family must find ways to develop values, personal responsibility, and commitment with socially useful activities.

Commodore Cornelius Vanderbilt, for instance, did not allow his children to have access to their inheritance. When he died in 1877, it is estimated that he was one of the richest men in the world. As trustee, his oldest son decided it was their money and gave all the heirs direct access to their inheritances (Jaffe & Lane, 2004). He, too, was one of the richest men in the world at his death. “When 120 of the Commodore’s descendants gathered at Vanderbilt University in 1973 for the first family reunion there was not a millionaire among them” (Vanderbilt II, 1989, p. ix). It appeared that family members may have been raised to expect a certain lifestyle that can quickly deplete a family’s wealth-producing assets.

Gambling and lottery winners. Government agencies routinely distribute large sums of money in a windfall manner to those who purchase lottery tickets. In effect, lotteries constitute large-scale non-contingent (i.e., independent of performance) processes that provide unearned largesse (Doherty, Gerber, & Green, 2006). Individuals who obtain big winnings in various state lotteries often suffer a ruinous set of circumstances. Individuals who win big time usually lose big time too as the web of their social relationships is ripped apart by greed. Money is a form of power, and any time one’s power exceeds one’s understanding the result is chaos and destruction. Persons who have wealth because they have earned it are not as likely to be harmed by it because they were able to exercise the discipline and restraint needed in order to accumulate capital in the first place. It is when big money falls into one’s lap (i.e., non-contingent) that real problems are most likely to occur.

Lottery ticket winners do not necessarily end up wealthier. Many end up bankrupt or broke within a short period of time. Hankins, Hoekstra, and Skiba (2011) found that more than 1,900 Florida lottery winners went bankrupt within five years, suggesting that lottery players were twice as likely to file for bankruptcy as the general population. The study also found that large lottery winners were less likely than small lottery winners to go bankrupt within the first two years, but the odds of bankruptcy were equal after five. It was as if the additional funds just postponed the inevitable. Even the Certified Financial Planner Board of Standards estimates that nearly one third of lottery winners will become bankrupt.

Winnings in gambling may also be considered a windfall. Gambling can be seen as a way of circumventing the principle that rewards should be achieved through work and it has at times been looked upon as a threat to the work ethic (Binde, 2007; Cosgrave & Klassen, 2001). Insofar as strong behavioral norms exist in society, emphasizing the virtues of earning one’s living through employment as opposed to living in idleness, large lottery winnings might also be viewed as representing a negative potential in that they encounter opportunities for withdrawal from the labor market. Many gamblers constantly hope that, somehow, somewhere, their “ships will come in” without much effort on their part.

Other areas

Because of space limitations, we do not address additional areas that provide unearned largesse resulting in detrimental effects in the long term. For example, codependence and enabling (McGrath, & Oakley, 2012), unemployment benefits (Hagedorn, Karahan, Manovskii, & Mitman, 2015), grade inflation (Felton & Koper, 2005), participation trophies (Merryman, 2013), natural resource curse (Haber & Menaldo, 2011), nursing home residents (Langer & Rodin, 1976), and “helicopter” or “hovering” parenting (Schiffrin, Liss, Miles-McLean, Geary, Erchull, & Tashner, 2014) have illustrated that helping can hurt.