Where Have All the Taxis Gone?

It's hard to get a taxi in New York City when it's raining. That's because the number of people who want taxis increases while the number of taxis available does not. This is a simple and easily observable example of basic economics. Increased demand for a non-increasing supply. What could be more obvious?

There's only one problem with this analysis: It's wrong.

It seems perfectly clear, of course. Which is why, when economist Colin Camerer and three of his colleagues set out to test that common assumption about the rain-related taxi shortage, many of his peers rolled their eyes. "What a lame excuse to get a grant," they thought.

But Camerer's team discovered something startling: When it rains in New York, the demand for taxis does increase. But the supply of taxis actually shrinks!

Here's why: New York cab drivers rent their cabs in 12-hour shifts. It's common for them to set a goal of making double the amount of their rental costs each day.

When it rains, demand for their service skyrockets. So the drivers can meet their goal of doubling their rental rates much faster. Then, instead of staying out in the miserable weather to make a few more dollars, many of them call it a day and go home.

Thus, the longer it rains, the fewer taxis there are on the streets.

This study came to mind when I saw the article in a recent edition of Chronicle of Philanthropy Daily Update titled "Conservative Donor's Foundation Backs Liberal Groups."

Turns out that billionaire Harold Simmons, chairman of the Dallas-based Harold Simmons Foundation, gave millions of dollars in last year's election season to defeat President Barack Obama. And he has given millions more to other conservative causes over the years.

But two of his daughters, one of whom has been a longtime supporter of Democratic causes, actually run the foundation's day-to-day operations. That daughter gave $600,000 to Planned Parenthood in 2011 and has supported PBS, anti-death penalty work, and arts organizations in and around Dallas.

Dinner table conversations at the Simmons house must be as lively as the ones at James Carville and Mary Matalin's place.

But the point here is that it never pays to second-guess a donor's motivation. We can rely on data and test results to show us what people actually do, but when we start making a lot of assumptions on our own about why they do or don't contribute, we're in treacherous waters.

This is where donor surveys can get you in a lot of trouble. People answer questions based on how they want to be perceived. But when it comes to actually parting with their money, their actions don't always match their words.

So survey, contact and interview your donors all you want. There's real value in doing so. But that value may turn out to have more to do with cultivation than with predicting their future behavior.