Flashcards for Markets Doing Good Lecture

A collection of 200 vocabulary-style flashcards derived from the lecture notes on markets, social impact, and economics related to charitable efforts.

What is the core focus of the course 'Doing Good'?

It explores how markets, nonprofits, corporations, and governments address social issues.

What is a 'savings failure'?

A situation where people do not save money even when it would be highly beneficial.

What are main reasons for the savings failure?

Issues like cash flow, social protection needs, and behavioral factors like procrastination.

How do education markets affect other areas?

Failures in education can impact health, jobs, and overall societal well-being.

What is a demand-side issue in education?

Households believe that the returns on education are low.

What is an example of a supply-side issue in education?

Governments struggle to borrow easily and thus cannot fund schools adequately.

What are the three main sectors involved in addressing market failures?

Nonprofits, for-profits, and government.

What is the role of nonprofits when government fails?

To innovate and share solutions.

What is a negative externality?

A side effect of an activity that harms others, like pollution.

What are public goods?

Goods that are non-excludable and non-rivalrous, such as clean air.

What is the 'Tragedy of the Commons'?

The overuse of shared resources due to individual self-interest.

What does the 2x2 framework illustrate?

It maps financial and social returns in investment and philanthropy.

What does a Theory of Change represent?

A plan showing how actions lead to impact.

What is impact investing?

Investing with the intention to generate positive social and environmental impact alongside a financial return.

What is the main disadvantage of a low overhead ratio in charities?

It can mislead donors about the true effectiveness of a charity.

What is behavioral bias in the context of charitable giving?

Barriers like procrastination or indecision that prevent people from donating.

What is a cash transfer in charitable aid?

Providing direct cash to recipients instead of goods.

What kind of problem do malnourished children face in terms of market failure?

Lack of information and credit constraints affecting food access.

What is one method charities can use to evaluate their effectiveness?

Cost-Effectiveness Analysis (CEA).

What does CBA stand for?

Cost-Benefit Analysis.

What are Information Asymmetries?

Situations where one party has more information than another, leading to inefficiencies.

What is the challenge of comparing causes in charitable giving?

Finding a way to measure impact between different areas effectively.

What does it mean for a charity to focus on 'redistribution'?

It aims to help the poor and those in need.

What context does the phrase 'warm glow' refer to?

The emotional satisfaction one feels from giving to charity.

What is a key obstacle to charitable giving?

Lack of clear information on charity quality.

What does the market failure of 'transaction costs' involve?

Costs associated with finding information and completing transactions.

How do public goods relate to market failures?

They are often underprovided because they cannot be charged for.

What role does the government play in market failures?

It intervenes to correct market failures through various means such as subsidies.

What does the term 'equity' refer to in social issues?

Fairness in distribution of resources and opportunities.

What is ‘pareto optimality’?

A situation where no one can be made better off without making someone else worse off.

What is behavioral issue in markets?

When people make irrational decisions, such as procrastination.

What can happen when there are high transaction costs in markets?

Markets can become inefficient due to the difficulty of trading.

Why is education considered a problematic investment in terms of market returns?

People underinvest in education despite its long-term benefits.

How do nonprofits seek to address redistributive issues?

By providing resources and support to underserved communities.

What is the main argument for using cash instead of in-kind support?

Cash allows recipients to address their most pressing needs directly.

What key factor affects donors’ choice of charities?

The perceived effectiveness of the charity.

What is the significance of measuring CEA in charitable organizations?

It helps determine which programs offer the best impact per dollar spent.

What does the phrase 'behavioral resilience' refer to?

The ability to withstand or bounce back from market failures.

What is the disadvantage of monopolies in the market?

They can prevent fair competition and exploit consumers.

What is a crucial aspect of theory of change?

Clarifying how and why an expected change will happen.

How does 'cost per life saved' relate to CEA?

It's a specific metric used in Cost-Effectiveness Analysis to evaluate health interventions.

What is meant by 'impact evaluation'?

The assessment of the actual effects of an intervention on the target population.

What does 'social returns' imply in charitable contexts?

The positive impacts that benefit society from charitable actions.

In the context of market failures, what does the term 'externalities' refer to?

Consequences of economic activities that affect third parties not involved in the transaction.

What are the benefits of Healthy Neighborhoods under social interventions?

They promote community stability and investment opportunities.

Why might cash be a preferred aid over in-kind goods?

Cash provides flexibility for the recipient to allocate resources as needed.

How do nonprofits differ from for-profits in their approach to social issues?

Nonprofits focus on social impact, whereas for-profits prioritize profit alongside social good.

What is a key factor that limits individual investment in education?

Misjudged returns or perceived low returns on investment.

What does the term 'inefficiency' refer to in market contexts?

A situation where resources are not allocated effectively.

What is a ‘phantom payroll’?

A form of corruption or mismanagement where non-existent positions are compensated.

What role do behavioral triggers play in charitable giving?

They can prompt or hinder timely charitable contributions.

How do subsidies function in addressing public goods?

They encourage the provision of goods that the market underproduces.

What is the key insight behind 'Cost-Effectiveness Analysis'?

It helps choose the most efficient intervention within a specific sector.

What does 'funding vehicles' refer to in philanthropic parlance?

Structures used to channel financial resources to causes.

How do social enterprises bridge the gap between for-profit and nonprofit sectors?

By generating profits with a social mission.

Why do people perceive high overhead costs negatively in charities?

They believe less money goes to the intended cause.

What measurement can help gauge a charity’s overall effectiveness?

Impact metrics that assess the results of charitable activities.

Why are positive externalities important for social welfare?

They create broader benefits for society beyond immediate effects.

What ethical dilemma is associated with Cost-Benefit Analysis?

It involves assigning dollar values to human life and welfare.

What is 'redistribution' in the context of economic measures?

Transferring wealth or resources to reduce inequality.

What is a potential risk of using CBA in evaluations?

It may favor projects that have higher monetary value over those with significant humanitarian impacts.

What is a key obstacle that behaviors create in charitable donations?

Overchoice or too many options leading to decision paralysis.

How does corruption manifest in public goods provisioning?

Through misallocation of funds and resources, leading to underperformance.

In charity context, what does 'accountability' entail?

Responsibility for achieving desired benefits and transparent reporting.

What does the term 'socially important goods' indicate?

Goods that have critical significance to public welfare.

Define 'moral hazard' in market settings.

A situation where one party takes risks due to not bearing the full consequences.

What is the objective of measuring externalities?

To understand the broader impact of activities on stakeholders.

What does 'costly signaling' in charitable donations mean?

Giving as a way to display one's social status or values.

In the context of education, why is there underinvestment?

Due to perceived misaligned private and social benefits.

What distinguishes a public good from a private good?

A public good is available for everyone, while a private good can be owned and excluded.

What defines a 'non-rivalrous' good?

A good whose consumption does not diminish its availability to others.

How can 'community-based solutions' address market failures?

By tailoring interventions to the unique needs and resources of local populations.

What is one major outcome of better education in society?

Enhanced public health and reduced market failures.

What is the significance of a transparent fundraising strategy?

It builds trust and encourages more donors to contribute.

What is the effect of high barriers to entry in markets?

They limit competition and protect existing players.

Why might family-centric funding models be less effective?

They can overlook broader community needs and lead to inequitable focuses.

What does 'cross-subsidization' mean in nonprofit settings?

Funding one service with excess revenue from another to maintain viability.

Why is understanding market failures critical for nonprofits?

To design effective interventions that address root causes and improve outcomes.

What common pitfall do many charitable organizations face?

Insufficient evaluation of their impact leading to ineffective practices.

What is a possible benefit of cash donations versus in-kind donations?

Maximizing recipients' autonomy in addressing their needs.

How do social norms influence charitable behaviors?

They guide actions and expectations within donation cultures.

What is the role of financial literacy in charitable contexts?

It prepares donors to understand and evaluate the effectiveness of charities.

How do shared resources relate to the Tragedy of the Commons?

Their overuse arises when individuals prioritize personal benefit over collective welfare.

What is the essence of philanthropy in terms of community?

Promoting social good for humanity's benefit.

What key role does empirical data play in charity effectiveness?

It helps in validating outcomes and attracting funding.

What does the term 'social impact' refer to?

The overall effect of a charity's efforts on the community it serves.

Why is it important to address behavioral issues when executing charitable projects?

To enhance participation and effectiveness of interventions.

What is the significance of 'social entrepreneurship'?

Creating innovative solutions to social problems while maintaining financial sustainability.

What does the term ‘contribution margin’ mean in charitable organizations?

The difference between revenue received and variable costs of delivering services.

Define ‘programmatic approach’ in charity operations.

A strategy focusing on specific programs or interventions to maximize impact.

Why are case studies valuable in understanding market efficiency?

They provide real-world examples and insights into the effectiveness of interventions.

What does the concept of 'voluntary exchange' mean in markets?

Transactions entered into freely by both parties for mutual benefit.

What is the relationship between household incomes and charitable giving?

Higher incomes often lead to higher donation levels.

What social issue might non-profit impact models address directly?

Food security among disadvantaged populations.

What do financial incentives typically aim to do in nonprofit ventures?

Align organizational goals with societal benefits.

How do cognitive biases complicate charitable giving decisions?

They can lead to irrational decisions like procrastination.

What is the purpose of ‘matching donations’ in fundraising?

To encourage more donations by doubling the impact.