A few weeks ago the Heifer Project animal gift catalog made its annual pilgrimage through our mail slot, landing on our entryway floor right on time for the holidays. Donating a farm animal to a family in a developing country as a Christmas gift to another has become a tradition in our own family. Over the years, I have been the patron donor of chickens, a goat, rabbits, frankly, enough farm animals to make Old McDonald jealous. One year I gave (part) of a water buffalo to my younger brother.

This is an increasingly common Christmas present—to make a donation to a poor family in a developing country in the name of a loved one. Increasingly, organizations such as the Heifer Project, World Vision, Samaritan's Purse, Kiva, and other charitable organizations send out gift catalogs and online promotions with a bounty of attractive Christmas gifts to choose from: a pig for a family in Nepal, a microfinance gift certificate for a budding entrepreneur in El Salvador, a freshwater well in Ethiopia.

With so many options available, the obvious question is: Which gifts have the biggest positive impact for the poor? This is a question that interests me not just as a Christian but as a development economist. Do these donations really make a difference, and if so what kind of difference?

Do Heifers Help?

Let's start by looking at farm animal donations. The specific question here is whether this cute farm animal donation idea is just an ingenious way to make rich Americans feel less guilty about their holiday excesses, or whether it really helps poor people overseas. Cornell agricultural economics professor Chris Barrett and I worked with three of our eager graduate students to find out. We used a statistical matching ...

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