Buy Charity Now, While It’s Still Cheap

Prior to 1800 or so there were no large differences in per-capita GDP between nations, differences were perhaps on the order of 2-3 at most. As modern economic growth took hold in some nations and not in others, between-country inequality increased dramatically with differences in per-capita GDP between nations of up to a factor of 100. As more and more nations enter a modern economic growth phase–which now includes a very rapid catch-up phase–between-country inequality has started to decline. In the future we may return to much smaller differences in per-capita GDP between countries.

As MacAskill points out in Doing Good Better (review here see also here) this means that we live today in an unusual time when charity is very cheap. Today, for example, it’s possible to save a life for as little as $4000. As other nations become rich that will no longer be true. More generally, the average person in a developed country can do a lot of good today by giving up relatively little. As MacAskill writes:

Imagine a happy hour where you could either buy yourself a beer for five dollars or buy someone else a beer for five cents. If that were the case, we’d probably be pretty generous–next round’s on me! But that’s effectively the situation we’re in all the time. It’s like a 99-percent-off sale, or getting 10,000 percent extra free. It might be the most amazing deal you’ll see in you life.

Comments

Except I don't know the person getting the beer I bought because they are on the other side of the world. So why would the average person buy the abstract stranger on the other side of the world a beer? You have to feel morality. That's just the way we are programmed.

For a certain set of people, the more alien and remote the beneficiaries, the more points you get for your altruism.

To be fair, we would expect nothing else in a context of effectiveness tracking, if more alien and remote beneficiaries are more neglected.

It is known.

Doesn't this also mean that in the future that much less charity will be needed?

You wouldn't know it if you took the 50 states as an example.

Different culture.

One year the Fed spend a lot of resources to get Appalachians food stamps, because obviously they need them.
They don't know what the hell the feds are talking about, as they grow more than half their food, but sign up so the lady from the government will leave.

Two years later there are other reports how the Appalachians are converting the food stamps to dollars in order to pay for their meth.

How is corruption factored in? If I want to help starving Somalians, how much of my charity goes to warlords and radical Islamists, and how much evil do I pay for along with the good? If I want to help needy Palestinians, how much of my donation goes to mansions and Mercedes for Palestinian politicians?

"Saving lives" doesn't mean making lives good. More is not better.

Also you could invest in a charity that gives life to more people in the future. With future technology, subsistence and quality of life increases should both become cheaper. (This requres stable property rights and solving some agency problems, though as Rob points out, that's a universal problem for charity.)

Sorry, this should have been an independent comment.

"More is not better."

No one ever thinks *they'll* be a part of the "more"...

No, because we're not. I don't live a life that could be saved for "as little as $4000" and I would not want to.

People just pretend that "saving a life" improves the world, without considering what kinds of life they are saving.

Quality >> quantity. Of course, this requires that people stop breeding like rabbits.

Does the calculation change if this is not a single-turn game? What if at happy hour next week there are 5 million people at the pub who want beers, many of whom are (open to) killing the others to take their beer? And the week after that, 50 million?

North Korea (right next door to the 9th richest nation in the world, with which they share millennia of cultural heritage), has been the recipient of charity for decades - are there any signs it's helping at all, and if it is, isn't it also helping them build nukes, money being fungible and all? India is a recipient of US gov't aid, but has money for a space program?

I understand where MacAskill is coming from - he's in the charity business, but the Jos. A. Bank model of advertising (buy one, get 6 free) only works until you get into the store and look at the goods and the prices...

North Korea doesn't receive charity so much as blackmail. And then they don't keep their end of the deal.
The US is still sending them heating oil as part of a deal for them not to develop nuclear weapons.

Agreed about US gov't aid. This does not sound like it was blackmail: http://www.wsj.com/articles/united-nations-food-aid-program-for-north-korea-lacks-donors-1409047712

| "As modern economic growth took hold in some nations and not in others..."

But, Mr Economist, Why such sudden dramatic differences in growth and wealth of some national populations ?

Capitalism & free markets! There is no other system yet discovered by mankind that so effectively raises the standard of living for the great masses. Abject poverty is otherwise the natural state of human beings.

('Give a man a fish and he eats for a day...')

If you really want to help the world's masses of poor people -- address their government institutions that suppress their economic improvement.

That word "address" carries a lot of weight.

At least when measured in explosive payloads, one Hellfire at a time.

While it's true that between country inequality has declined (and declined a lot), what Tabarrok omits is that within country inequality has increased (and increased a lot), including within developing countries. Developed and developing countries do share one thing: inequality within.

Imagine a happy hour where you could either buy yourself a beer for five dollars or buy someone else a beer for five cents.

Except beers for you always cost $5 whether you buy them or someone else does. Thus the person who can only afford 5 cent beers can never reciprocate.

(Except, well, maybe the 5 cent beers come from where he lives in which case he can sell you 5 cent beers so you don't have to spend $5 on them yourself. But that would be putting those $5 beer making American workers out of jobs.)

Working with metaphors appears not to be your strong suit.

I've been arguing the opposite for many years: http://www.overcomingbias.com/2013/04/more-now-means-less-later.html You might want to check out my blog sometime. ... ;)

So the question becomes, is the expected rate of return on capital that you have access to smaller or greater than the rate at which the MU of starving children in Africa is decreasing? If it's greater, you should save. If it's smaller, you may want to give now, but if that's the case then that would imply that wealth in Africa is growing quickly and so you should also explore the option of _investing_ in Africa alongside either present or future charity spending. To what extent that's viable seems like a question involving complex empirical research that's probably worth a givewell article...

Of course, poverty is relative; what constitutes poverty in the U.S. is different from what constitutes poverty in sub-saharan Africa. Similarly, where inequality is rising, what constitutes poverty today is different from what constitutes poverty tomorrow. Providing charity to the lowest quintile in a place where inequality is rising faster than the incomes of the lowest quintile including benefits conferred by charity doesn't reduce poverty. The poorest quintile is becoming poorer by the day relative to those above. Providing public benefits to the lowest quintile in a place where inequality is rising faster than the incomes of the lowest quintile including public benefits doesn't reduce poverty. This helps explain why those in the U.S. who wish to do good prefer to do it in sub-saharan Africa even if inequality is rising faster than the incomes of the lowest quintile including benefits conferred by those who wish to do good.

Please stop talking about inequality. Either the person is starving, or not. Either the person has shelter, or not.

I'm the poorest person in my Manhattan doorman building!

I'm the poorest person of my HBS graduating class!

...

You could go to poor countries and create a brand new life for far cheaper. You are advocating putting $100 million into retooling a factory when a brand new one can be had for $1 million.

"You could go to poor countries and create a brand new life far cheaper."

I think Ray Lopez wants to try that!

It is not even clear that charity is cheap today. Since a large (perhaps even the majority of charities) spend their money inefficiently and ineffectively, why should I assume that a dollar donated even to those identified as being "better than average" would hit the mark? As far as I know there are few to no rigorous analyses that take into account general equilibrium effects of most giving (such as dictators using aid money to shift regular funds to armaments) in addition to red tape and bureaucratic nonsense. Even worse are externalities to aid which might include increased rent-seeking. Until I see dozens of reliable studies detailing charities where aid giving is demonstrably more effective (to a very, very high standard of rigor) than doing nothing, I will continue to assume that effective giving is much more costly, less effective, and less desirable than simply dropping money on the street.

You may be interested in GiveDirectly, a charity that exclusively gives cash transfers to the extreme poor. They've done a lot of research to see how people use the funds, and use mobile money technology to combat corruption. Kind of an organized way of dropping money on the street. http://givedirectly.org

check out http://www.charitynavigator.org/

I rather spend my $5 on a beer for myself. Thanks.

Most people feel the same. You don't see many people donating effectively, based on GiveWell. They generally receive benefits back, such as preferred entry slots for the school, preferred treatment status at the hospital and so forth.

It is all about governance, good governance better life, bad governance poor life.

In other words, allowing massive immigration now is a bad idea because it's irreversible, while the current poverty of poor countries ought to be overcome fairly rapidly if they don't have the outlet of the First World for their bad policies and customs.

Any evidence that countries with a First World "outlet" reform at a slower rate than those without?

Buy 1 American a beer or 10 Asians with my dollars?

such cynicism, such presumption, in a world that will likely never be recognized as having existed . . . so what was it that we added 2the game, if anything?

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