A concerted effort is being made by institutions like the World Bank to quantify various types of transaction costs incurred by businesses (Doing Business, Enterprise Surveys). The rationale for focusing on transaction costs (and reducing them) is usually couched in mainstream economic concerns. That is, in an attempt to increase growth rate of GDP per capita, create jobs, reduce poverty, and so on.
However, there are many social activities containing costs that are not being accounted for in these surveys. Charitable giving, not the favorite of mainstream economists, is one such transaction. The role charitable donations play in alleviating poverty and helping the economically distressed should not be overlooked. For those of us closely associated with the task of building indicators, the key question is whether the costs associated with a given non-mainstream exchange like charitable donations are significant enough to warrant a closer look.
See full Press Release.
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