Adverse Selection in the Market for Help

During lockdown I have had an overwhelming urge to help people, which hasn’t felt like a conscious decision but something compelling from deep down. It happened at the start of lockdown 2020 as well, before a subsequent bout of malaise took over, preventing the compulsion being acted upon.

This lockdown, so far, has been different. I have acted. To fill the time and get out of my head temporarily, I have been baking and distributing the treats amongst friends. The backpack goes on with packages wrapped in plastic, dealing out dopamine hits of sugar. I’m the smallest of small-time drug mules, and of course I take a cut of the product myself as well.

In a way this has been more important for me than the recipients. It has given me resolve during lockdown, helping fight off the blues which defeated me last time (which reminds me of the Fleet Foxes lyric “what good is it to sing helplessness blue, why should I wait for anyone else?”).

After dwelling on the introspective viewpoint, I started to think about the recipients and their responses, which was a mixture of thankfulness and surprise. What was that surprise borne out of? My initial conclusion was because acts of kindness are rare. On deeper reflection, there is an important distinction to be made; that of uninitiated kindness and response to requested help. While uninitiated acts are uncommon, requested help is usually available in abundance.

The market for help, however, is highly inefficient. Everyone needs help at some stage of their lives: moving house, recovering from the death of a loved one, or even as simple as needing a cup of tea (which I have found to be the act with the greatest ratio of pleasure provided to effort taken). We can label this as the demand for help. For supply, we have friends and family willing and able to help.  The problem is, only we ourselves know how much help we need and in what form. The suppliers need to know this to actually help, but all too often they do not. In econospeak we label this adverse selection; when a buyer or seller has information that the other does not have. So perhaps the bigger problem is not a lack of kindness or help being provided by people, but a lack of help actively being sought out when required.

Personally, I have felt both sides of the equation. I didn’t reach out for help last year when I really needed it, leading to feeling even more isolated. The most frustrating thing is how completely self-aware I was at the time, this isn’t a case of hindsight which is usually the portal to self-awareness. This was insight occurring during the process, which could have led to the situation being avoided.

On a broad scale we see this play out in higher suicide rates for men, who are less likely to reach out for help when they really need it. It is quite confronting to think that this can occur to the extent that people will choose suicide over asking for help.

Earlier this year I experienced the healthier alternative. After going through the breakdown of a long-term relationship, I was at such a low ebb that avoiding help from others was nearly impossible. Knowing the state of mind I was in (using hindsight this time), it scares me to think how dark things could have got without family and friends. Every single time I reached out to someone there was a positive response. The different roles people took was a fascinating discovery, help comes in many different forms: the friend who felt my devastation and gave me a hug which let me breakdown when I need to break down; my mum and dad collecting my things as going there was too painful for me;  the friend who was simply always available; the friend who would get my mind off it by talking about anything else; the friend who gave me a bed for two weeks immediately after; the friend who I noticed would subtly check on me at social events.

These different forms of help point to another aspect of adverse selection, the asymmetry in knowledge about quality. The classic example of the used car market illustrates; sellers of used cars know their quality while buyers do not, leading to buyers being very wary of getting ripped off. The quality of help matters. For example, my baked goods may be a nice thing to do, providing temporary relief for someone, but they may need to talk through issues they are having in lockdown or need someone to encourage them to get out of the house for exercise more. To go back to the car analogy, buyers sometimes respond by verifying the quality of the car through a mechanic. People do this with help as well. Couple’s counselling is often used to help one party better communicate that they need help and what that needs to look like for them. Sometimes we need a mechanic for the feelings!

Another reason why the market for help is undersupplied is that there are co-benefits to the participants which are not accounted for. One major one I experienced is that it creates stronger relationship bonds. When you have sobbed uncontrollably into a domino’s pizza box while watching Emily in Paris in front of three of your mates there is not much else you, or they, can be insecure about in the future. In this way a positive feedback loop is created where it will be much easier for you to ask for help in the future and for them to ask for help from you in turn.

So, let us make a commitment to shift some of the burden from helpers and be better helpees. Helpees will reap the benefits of getting through tough periods, helpers will receive that fulfilment from being there for someone they care about, and we will all have stronger relationships from the experience.

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