Charitable giving suffers from market failure, which means government redistribution and other forms of social insurance can be justified. According to market failure theorists, charitable giving for poverty alleviation suffers from a free rider problem. In a free market, giving will, therefore, be under provided. Using insights from public choice theory and Austrian economics, our paper finds market failure arguments to be an insufficient justification for government intervention. Private charity and redistribution respects autonomy and is more robust in creating incentives for people to help the poor.
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