Welcome back Franco fan! Please share your thoughts and leave some comments!

Money and manure … two things most people don’t associate with each other, but the perfect segway into the third part of the Frugal Franco formula (Save + Invest + Give Back … I guess to be a formula it has to equal something, so I would say it equals Fulfillment). Given the time of year, I felt it would be apropos to break out the inaugural “give back” post as many people are in the giving spirit during the holidays.

Why give?

From a purely hedonistic standpoint, there is no logical argument to support the notion of giving to others with no expectation of immediate or future returns. For those that subscribe to this point of view, this site probably isn’t your cup of tea as disciplined spending, saving, investing, and giving aren’t exactly the hedonist’s mantra. I, for one, believe we as a human race have a responsibility to care for each other and the resources at our disposal.

Starting from this world view the question then becomes, “who should I give to?” To help address this question, let’s look at a measure called utility. In it’s most basic form, utility can be thought of as a relative measure of satisfaction for various goods and services (I know…sounds confusing, but let me break it down).  The key to this definition is the phrase “relative measure.” Utility is relative because it is not universal and changes for every person (put another way, “One man’s trash is another man’s treasure”). It is a ”measure of satisfaction” because it allows us to compare the joy or happiness we receive from consuming or utilizing stuff. As always, the best way to explain this concept is through an example.

Let them eat cake!

I can’t speak for everyone else, but I love cheesecake! If someone where to offer me a slice of Cheesecake Factory cheesecake for $5, I would probably think twice about it (after all, we are in a recession) but ultimately take them up on their offer. Now, as everyone knows, cheesecake is a very rich dessert and the portions at the Cheesecake Factory are big enough to choke a donkey. So after I finished polishing off my ginormous slice of Dulce de Leche Caramel Cheesecake, I probably wouldn’t feel very good. If someone was to then offer me a second slice of cheesecake for the same price, I may very well turn the offer down as my craving would be adequately squelched and my stomach would be making sounds akin to the first movement of Beethoven’s Symphony No. 5. Since I can take the cheesecake home and eat it later, it would still hold value for me, but probably less than $5.

Assuming this mysterious Barron of Cheesecakes had an unlimited supply to offer, the amount I would be willing to pay would gradually decrease until it dropped pretty close to zero (after all there are only so many cheesecakes I can fit into my car and fridge back home). Therefore, the utility value of the 10th cheesecake would be much less than that of the first.  

The Greatest Happiness for the Greatest Number

The moral criterion known as utilitarianism seeks to maximize the total utility of all the individuals in a group or society. In our scenario, assuming there are 10 other people with similar utility functions as myself, the collective utility of the group would be maximized by each person receiving exactly one cheesecake. In the same way, by giving to those less fortunate than ourselves, we maximize society’s total utility.

So going back to the original question of, “Who do I give to?” the answer is “it depends” (I always hated when someone gave me this answer and now I doing it…for that, I apologize a thousand times over). It depends entirely on the utility of the giver and what they feel is important. For some it might be the opportunity to provide a quality education to less privileged children or preserving our natural resources. Others may feel that the collective utility of society would be maximized by funding research to cure disease. Still others might look at more basic needs like food and clean water for people in third world countries. Just recently I came across a wonderful organization called Charity: Water who’s goal is to bring fresh drinking water to every person on earth. The great thing is that there doesn’t have to be one right answer. Every person has a unique and relative utility function that determines what causes are important to them. There are plenty of wonderful organizations out there looking for help (both financially and physically) to make the world a better place. I encourage you to find a couple of them that are important to you and start treating some of your money like manure by spreading it around a bit.

Ciao,

Related posts

• Cheap vs. Frugal
• Beyond Frugal