A side-discussion over at Catallaxy about the book "Conspicuous Compassion" made me think harder about the economics of what the Americans call "panhandling". (Australians would call it begging, but somehow I prefer the US word. If you prefer, just substitute "begging" for "panhandling" in what follows.)
The question is this: how much does the typical panhandler earn?
Let’s start by assuming that panhandling is a competitive market. Given that there are no barriers to entry and minimal government regulation, this doesn’t seem a bad assumption here. In that case, the hourly wage of a panhandler should equal their marginal productivity as a panhandler. Moreover, if we assume that panhandling isn’t entirely different from other jobs, the hourly wage of a panhandler should approximately equal what they could produce each hour in other jobs.*
My guess is that for most of those who stand at a street corner, their non-panhandling wage would be pretty low. Which means that if the panhandling market is competitive, their wages as a panhandler will be low too. There will doubtless be a few who make a lot of money from panhandling (and they will typically be those whose non-panhandling wages would be high too). But it’s unlikely that there are too many living the life of Riley.
Of course, there another way to answer this question: does anyone know of any careful studies on the earnings of panhandlers?
* There are two factors that might affect the gap. On the one hand, since panhandling carries a social stigma, the hourly wage of a panhandler may be higher to reflect this (just as risky jobs typically pay more than safe ones). On the other hand, panhandlers do get to set their own hours, so some may be willing to take a lower wage to reflect this.