Effective Altruism: where charity and rationality meet

That is the title of my current column at The Upshot.  I very much enjoyed my read of William MacCaskill’s Doing Good Better: How Effective Altruism Can Help You Make a Difference.  The point of course is to apply science, reason, and data analysis to our philanthropic giving.

I am more positive than negative on this movement and also the book, as you can see from the column.  Still, I think my more skeptical remarks are the most interesting part to excerpt:

Neither Professor MacAskill nor the effective-altruism movement has answered all the tough questions. Often the biggest gains come from innovation, yet how can a donor spur such advances? If you had a pile of money and the intent to make the world a better place in 1990, could you have usefully expected or encouraged the spread of cellphones to Africa? Probably not, yet this technology has improved the lives of many millions, and at a profit, so for the most part its introduction didn’t draw money from charities. Economists know frustratingly little about the drivers of innovation.

And as Prof. Angus Deaton of Princeton University has pointed out, many of the problems of poverty boil down to bad politics, and we don’t know how to use philanthropy to fix that. If corruption drains away donated funds, for example, charity could even be counterproductive by propping up bad governments.

Sometimes we simply can’t know in advance how important a donation will turn out to be. For example, the financier John A. Paulson’s recently announced $400 million gift to Harvard may be questioned on the grounds that Harvard already has more money than any university in the world, and surely is not in dire need of more. But do we really know that providing extra support for engineering and applied sciences at Harvard — the purpose of the donation — will not turn into globally worthwhile projects? Innovations from Harvard may end up helping developing economies substantially. And even if most of Mr. Paulson’s donation isn’t spent soon, the money is being invested in ways that could create jobs and bolster productivity.

In addition, donor motivation may place limits on the applicability of the effective-altruism precepts. Given that a lot of donors are driven by emotion, pushing them to be more reasonable might backfire. Excessively cerebral donors might respond with so much self-restraint that they end up giving less to charity. If they are no longer driven by emotion, they may earn and save less in the first place.

On Paulson, here is Ashok Rao’s recent post on compounding returns.