CharityFocus Blog: Reflections on the "Pay What You Can" Model

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Reflections on the "Pay What You Can" Model

Posted by Birju Pandya on Jul 4, 2010

Came across an interesting perspective in a Salon article on Pay What You Can Restaurants, in which an economist tries to explain why allowing customers to decide their own prices is a bad idea. Also of interest to note that I've yet to see any economist refer to any internal shift that happens from truly connecting with another. Our friend Rahul Brown shared some reflections on another forum, which I thought were great:

A few years ago when we were trying to launch InSPIRE's young professional program, we decided to go with 'pay what you want' model instead of gift-economy. Since we were all volunteers, program expenses equate to actual costs, and so we were trying to boldly communicate our spirit while at the same time hedge on the risk of lacking the funds to make the program happen. The overall lesson I learned from the experiment is that 'pay what you want' (esp. for things people have never paid for before) can generate confusion, but can also be a doorway to clarity if dealt with patiently. Sub-lessons include:

Value is Arbitrary -- No two people value the same thing in the same way; no person values the same thing the same way in different circumstances; the preciousness of the same amount of money varies greatly with your present life circumstances and desires
Money Obscures Value -- People confuse money with value because of superficial relationships with both; paying for something at any price leads to the assumption that its 'paid-for' whereas in reality there is always some outstanding debt that ought to be both a reason for gratitude and an impetus to pay-forward some of what you've received
Gratitude and Freedom Generate the 'Highest Return' -- By allowing for the greatest thoughtfulness and flexibility, you generate precisely the right 'return' out of the confusion of how to value something; by generating non-monetary returns, you capture what would have been lost with a price tag; gratitude and freedom is liberating to both giver and receiver in both the present moment, and those who have given to the giver in the past as well as ones who will receive from the receiver in the future

While we suffered a bit, I am glad we tried 'pay what you want' and I think any such experiment when viewed objectively without uni-focus on financial bottom line would yield similar insights and thus be a 'success'. I hope to see a greater proliferation of people honestly attempting 'pay what you want' experiments, as I think they're a critical station along the journey or reorganizing our relationships with money and each other.

Posted by Birju Pandya | comments (3) | permalink | more 'General' |

Comments

On Jul 05, Somik* wrote:*		At a more basic level, I find most classical economists lacking clarity on whether their discipline is normative (what should be) or descriptive (what is). This leads to unfortunate assumptions (e.g. human-beings are rational actors). Gandhi, a long time ago, came to the conclusion that (classical) economics is not a science, for its fundamental assumption (all things being equal) never held in reality.

On Jul 05, Chris* wrote:*		My behavioral economics professor in college displayed a similar initial skepticism when I first told him about Karma Kitchen. :) But that's a great distinction Somik: normative vs. descriptive. My sense is that's where the 'behavioral' piece builds on classical economics and why many "homo economicus" assumptions are being debunked by observed behavior, whether through experiments or actual events like Karma Kitchen. Another useful distinction is to consider the three types of power being employed in any action. Classical economists are stuck on "exchange power" (you give me this and I'll give you that). Political scientists tend to speak the language of "threat power" (do this, or else I'll do something you don't like). And then there's "integrative power" (I will be my most authentic self and trust you to be the same). If you look at actions that come from a place of integrative power through the lens of exchange power, then you'll see the befuddlement shown in this interview. Interestingly, these "three faces of power" were put forth by Kenneth Boulding, who worked in economics, among other disciplines. :) Finally, here's an interesting blog post mentioning Ira Glass' (from "This American Life") take on 'pay what you want': (see link)

On Jul 05, Somik* wrote:*		Great thoughts, particularly Rahul's point #3. This is related to a very fundamental problem with classical economics. The economists worry about asymmetry of information. In plainspeak, this means, "some people know more than others." Our grandmothers would laugh at this being treated as a problem by highly educated people, with bombastic terms. If there were no asymmetry, we would not need to serve each other or to learn from anyone. Value asymmetry, "or people value things differently," is something we have to be grateful for. At one level, it is the reason why, when I buy a torch, I am smiling, as is the person selling the torch. At another level, it is why our value stories weaved together form a much richer composite than when looked at individually. At a deeper level, our economist brothers and sisters do not distinguish between intrinsic, prudential and systemic values. The philosophers of formal axiology go further - they lay out for us the axiom that human beings ARE intrinsic values, not to be used as means-to-an-end, or for fulfillment of any ideology. Acceptance of this axiom would lead to very interesting conclusions for various fields of study, in particular, GDP/Growth Engine-focused economics, be they Keynesian (the current paradigm) or Austrian. It is also the reason why I find Amartya Sen's work on "Development as Freedom" brilliant but still in the prudential realm, stopping short of intrinsic values.

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Reflections on the "Pay What You Can" Model

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