Articles Development

Why chucking shoes at the problem won’t fix the economy

An effective way of doing charity or just a shrewd advertising campaign?

TOMS shoes operate a “One for One” initiative: for every pair of shoes they sell, they’ll give a pair away in the developing world. The company claims to have “improved millions of lives” in impoverished countries already. But how much good are they really doing?

Multiple studies have looked into the donation of apparel to developing nations, investigating the impact such schemes had on the local economy. This type of aid damages the domestic market and lowers employment because it involves donating a good or a service that the nation already supplies domestically.

Frazer (2008) demonstrates this in the context of used clothing imports in sub-Saharan African countries, asking why textile production has not emerged as a leading sector of development. He found that the clothing donations had a strong negative impact on local producers. While recognizing the benefits to consumers, he attributed the donations to a 40% decline in clothing production and a 50% employment decrease in the industry.

In relation to TOMS, however, this argument isn’t so convincing. This paper takes a look at their impact on local markets in El Salvador. They studied 979 households across the nation, splitting them into two groups; both were given coupons for discounts on shoes at local vendors but each household in one group received a free pair of TOMS. The results were – somewhat underwhelmingly – statistically insignificant. The donations only reduced coupon redemption rates by 2.3%. TOMS donated shoes had no significant impact on shoe consumption or local producers.

But this is not the end of the case against TOMS as this study is far from perfect. The results on coupon redemption were taken after only 3-4 months, not leaving enough time for the results to fully develop – I mean how often do you buy a pair of shoes? Moreover, to claim that the results provide no proof of TOMS negative impact is more than a little misleading. If you take a closer look at the study, you will notice that for all the comparisons made the “point average” is negative; in other words, though no single result was statistically conclusive, together they all demonstrate a decline in consumption after receiving a pair of TOMS.

Reading this study it was easy to get bogged down in the statistics and experimental models, but one thing stuck out; what was the point? Why are TOMS giving people free shoes? Is everyone in El Salvador really unable to afford their own shoes? As it turns out, far from it. In the study of 5,607 individuals, approximately 80% of the children owned between two to three pairs of shoes. It seemed even the very poorest of all the families could afford shoes. When they did see people walking barefoot it was hardly ever because they didn’t have a pair of shoes but they would rather walk barefoot.  It really begs the question as to what “void” TOMS are trying to fill.

There is certainly an argument that this shoe ownership could be in part TOMS doing. Their shoes are certainly worn and not just chucked in the closet with the rest – 90% of children who receive shoes wear them. The shoes are also something of a higher quality than the cheap flip-flops or sandals that most people own. So sure, people seem to like TOMS and if they get them they wear them. But this really doesn’t mean they need them, nor that their “One for One” initiative is helpful.

Fundamentally it’s just an inefficient way to do charity; it concentrates on initiatives that waste donations by not doing the most good possible with it. Personally, this is not the biggest problem I have with the scheme. The worst part is that it promotes the view that the poor are irrevocably helpless and can only sit around hoping to receive a pair of TOMS thanks to the benign Western shoe-buyer. This kind of message perpetuates an unhelpful worldview that leads to seriously damaging policies. TOMS “One for One” initiative is a genius way to make espadrilles trendy and sell shoes, not for doing charity.

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