> you're saying that when a charity provides bed nets, it causes individuals to make the irrational and sub-optimal choice of using a bed net without purchasing it.If your choice is between buying a bed net, or taking one that is available for free, the rational and optimal choice for you, if we only consider that choice itself, is to take the free one. Isn't that obvious?
But this is a first-order effect, and I'm talking about second-order effects. Most people who are given bed nets by charities probably can't afford to buy them. What I'm thinking about is this: people who get bed nets from charities are probably used to thinking of valuable things like bed nets as being provided by charity. They aren't used to thinking of them as something that can be worked for. More generally, they think of wealth--not just bed nets but things of value generally--as something that is pre-existing in the world, and it's just a matter of who happens to have it and is willing to give it to those who don't happen to have it. They view wealth as a zero-sum game.
But in reality, wealth is something that gets created. Those bed nets didn't grow on trees. Somebody made them. Somebody created the wealth they represent. But in order to create wealth, people first have to understand that wealth can be created, and people who are used to getting things through charity aren't likely to think that way. So they won't even think of, for example, figuring out how bed nets are made, and starting up an operation to make them themselves. Then they wouldn't need charity. They wouldn't even need to buy the bed nets. (And even if they did choose to buy them, it would be because they are doing something else that creates even more wealth, so they have enough surplus to trade for the bed nets and still come out ahead.)
Now you could say that, if all that is true, it is irrational to accept charity, instead of choosing to learn how to create the wealth yourself. I sympathize with that impulse; I have it myself. But now we're using a different definition of "rational", according to which people in sub-Saharan Africa, with no education, are supposed to understand wealth creation and economics well enough to see that accepting bed nets from charity, even if it benefits them in the short term, is not optimal for them in the long term. This definition of rationality, while it seems attractive in the abstract, has the huge downside of being totally unreasonable. It's much more reasonable to accept that people's perceptions of the choices available to them are affected by their environment, what they see other people around them doing, and what choices have been available in the past. That's why providing charity to people who are capable of creating their own wealth is, in the long run, a bad idea; it affects their own perception of the options available to them, so they don't even think of wealth creation as an option.
> I'd be especially curious how the presence of the charity causes people to act irrationally.
I'm not saying it does. Accepting charity if it is available is a rational choice, if a person is only considering that choice in isolation. The problem is with second-order effects. See above.