Tag Archives: Charity

If More Now, Less Later

On Thursday I talked, together with Elie Hassenfeld of GiveWell, at the UC Berkeley Faculty Club on Effective Altruism (audio here). Scott Alexander wrote a thoughtful report, which Tyler blogged. One claim I made that I’ve before (here, here, here) is that because real interest rates (i.e., average investment rates of return) tend to be positive, it is more effective to wait, investing now and then donating later. Since many continue to question that claim, I thought I’d elaborate a bit.

In the past I’ve used Ben Franklin as an example of the possibility of using trusts to save for a very long time. But I think that distracted from my basic point, which can be made just by suggesting that you wait until the end of your life to donate. Waiting longer might in fact be better, but it has more tax and agency issues; you can’t as easily ensure your money is spent the way you want.

I admit that a good reason to donate now is if you believe that we are quickly running out of worthy recipients of charity, either because the world is getting richer and nicer, the charity world is getting more effective, or we happen to live in an unusual time of great need or danger. People who think that global warming and ecological collapse will soon make the world a hell can’t believe this, nor can those who fear great disruption in an em transition. But others may.

I also agree that tax considerations will change the rate of return you can expect, and that by giving over a period of time you may learn from your early gifts to better pick later gifts. But it should be enough to start this learning process when you are older; your life experience will help you learn faster then.

The issue I want to focus on in this post is: how high do interest rates have to be to justify saving to donate later? I’ve sometimes said that interest rates need to be higher than growth rates, and some have questioned if interest rates are in fact higher than growth rates. Others, like my co-speaker Ellie Hassenfeld and his college Holden Karnofsky at Givewell, argue that giving now to help people who are sick or under-schooled creates future benefits that grow faster than ordinary growth rates. But now I think I was mistaken – if real charity needs are just as strong in the future as today, then all we really need are positive interest rates. Let me explain.

When a person chooses to save financially, they choose to spend a bit less in their usual ways, in order to give money to someone else, in the expectation of getting money back from that someone else at a later date. If they had instead not saved, and spent the money instead, that spending may well have also indirectly benefited them in the future. They might buy some medicine, get more exercise, get more sleep, try out some new products, make some new friends, or learn some new skills, any of which might help their future self.

But at the margin, a person who saves another dollar, or chooses not to borrow another dollar, must typically expect the financial returns from their investments will help them more in the future than will such indirect effects of spending today. In fact, they should expect this savings will benefit their future self more than any of these other ways of spending today. After all, why give up money today if that both gives you less to spend today, and gives you less in the future? So there wouldn’t be any savings, or less than maximal borrowing, if people didn’t expect more gains later from saving than from spending today.

This implies that unless charity recipients are saving nothing and borrowing as much as they possibly can, they must expect that you would benefit them more in the future by saving and giving them the returns of your savings later, than if you had given them the money today, even after taking into account all of the ways in which their spending today might help them in the future. So there really must be a tradeoff between helping today and helping later; if you help more today, you help less in the future. At least if you help them in a way they could have helped themselves, if only they had the money.

Of course you might not care as much about future suffering, or future folks might suffer less. But if you do care as much, and there is as much future need to help, then if interest rates are positive you can obtain more real resources with which to give more real help if you will save now, and donate later.

You might wonder: what if a deserving charity recipient is borrowing, and at a higher interest rate than you can get from by investing? This implies that you might benefit them and yourself by loaning them money, if you could overcome the barriers that have prevented others from doing so. It also implies that if you were going to help them, you might want to do it now rather than later. But this doesn’t change the fact that there is a tradeoff between helping today vs. tomorrow. And if there will be people later in a similar situation of need, you can do more good by waiting to help them later.

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Bay Area Events

April 4,5, I’ll be at three public events in the Bay Area, CA:

  • Noon April 4, free food, talk on Em Econ at Quixey, 278 Castro St. (enter via Bryant St) Mountain View, CA. Please RSVP. Added: video.
  • 5pm April 4, free pizza, talk on Effective Altruism with GiveWell’s Elie Hassenfeld, at UCB Faculty Club, Howard Room. Added: audio.
  • Noon, April 5, OB picnic at UCB entrance grass, 2099 Oxford St, Berkeley, CA. 37.871565, -122.265751.

Btw, I was quoted in a 11Mar NPR show on Intrade closing.

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Breeding happier livestock: no futuristic tech required

I talk to a lot of people who are enthusiastic about the possibility that advanced technologies will provide more humane sources of meat. Some have focused on in vitro meat, a technology which investor Peter Thiel has backed. Others worry that in vitro meat would reduce the animal population, and hope to use futuristic genetic engineering to produce animals that feel more pleasure and less pain.

But would it really take radical new technologies to produce happy livestock? I suspect that some of these enthusiasts have been distracted by a shiny Far sci-fi solution of genetic engineering, to the point of missing the presence of a powerful, long-used mundane agricultural version: animal breeding.

Modern animal breeding is able to shape almost any quantitative trait with significant heritable variation in a population. One carefully measures the trait in different animals, and selects sperm for the next generation on that basis. So far this has not been done to reduce animals’ capacity for pain, or to increase their capacity for pleasure, but it has been applied to great effect elsewhere.

One could test varied behavioral measures of fear response, and physiological measures like cortisol levels, and select for them. As long as the measurements in aggregate tracked one’s conception of animal welfare closely enough, breeders could easily generate immense increases in livestock welfare, many standard deviations, initially at low marginal cost in other traits.

Just how powerful are ordinary animal breeding techniques? Consider cattle:

In 1942, when my father was born, the average dairy cow produced less than 5,000 pounds of milk in its lifetime. Now, the average cow produces over 21,000 pounds of milk. At the same time, the number of dairy cows has decreased from a high of 25 million around the end of World War II to fewer than nine million today. This is an indisputable environmental win as fewer cows create less methane, a potent greenhouse gas, and require less land.

 Wired has an impressive chart of turkey weight over time:
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Marginal Charity

People often ask: where can I get the best bang for my buck in charity? The above diagram shows where.

We make many choices, both as individuals and as organizations; we choose prices, qualities, locations, etc. We often make such choices to maximize some sort of private gain, shown in red. Such private choices also usually have effects on the gain of the rest of the world, shown in black. In general the social gain curve peaks at a different point than the private gain curve, because there are usually many market failures associated with our choices. (As the absolute curve heights are irrelevant, I’ve arbitrarily let them intersect where private gain peaks.)

At the choice that maximizes private value, a small change in the direction of raising social gain, as shown by the yellow arrow, comes at only a tiny loss in private gain. In fact, in the limit of going to the exact private gain maximizing choice, the ratio of the rates of change of social gain and private loss approaches infinity!

The lesson: if you aren’t already doing it, by far the most cost-effective way to help the world is to shade your selfish choices just a little in the direction of making the world a better place. If you have market power when you sell a product, lower your price just a tad. If you have market power when you sell your labor, lower your wage a bit. Instead of choosing the profit-maximizing quality for your product or labor, increase that quality a little. If twenty floors would be the most profitable height for your apartment complex, add one more floor. And so on. (And maybe learn some econ, so you can better see which direction is good.)

Yes, you usually aren’t sure what is your best selfish choice; your choice might already be accidentally helping the world at a bigger personal cost than you intended. But you might also be accidentally hurting both you and the world. If you are now doing your best guess way to help yourself, shift just a bit toward helping the world; on average that will cost you very little and give the world a lot.

Yes it is harder to pay others to take this approach. If you tried to pay an apartment builder to add one floor beyond the twenty they’d otherwise build, they’ll probably quickly learn to lie and say that nineteen floors is what maximizes their profits. So this approach tends to be limited to choices where you are the insider who knows the internal best estimates, or where you trust an insider not to lie to you. Still, most of us make selfish choices all the time, so we should all have lots of opportunities to apply this method.

If this is such an easy way to help the world, why haven’t you heard about it before? Why isn’t this a standard part of everyone’s education? I’d guess it is because it is hard to show that you are helping the world via this method. And people care a lot more about seeming to help, than about actually helping. Also, even if this could be made visible, we are usually much more eager to show we’ve paid a high cost than to show we’ve achieved a big social gain; it is the cost that makes for a credible costly signal of our virtue. Finally, this can’t be the basis of an inspiring hero story; it is something that many folks can each do a little, not something that one person can do a lot.

(I doubt I’m original here; this point seems pretty obvious given basic optimization theory. But I didn’t see anywhere else I could link to that makes this point.)

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Young Idealist Reply

I wrote:

Humans … slowly gain competence over a lifetime, usually reaching peak productivity in our forties and fifties. … When people get idealistic, they tend to forget this. … They want to know how to most help the world in the next few years, not over their lifetime. … Young folks … should expect to prepare and learn while young, and then have their biggest influence in their peak years.

Alex Waller disagrees:

When I’m 50 I don’t really want the world to be the way it is now. I don’t want to bide my time and merely learn and network idly for another decade or two while someone else is responsible for enacting positive change in the world.

News flash: you are just one of seven billion, so you aren’t going to personally make much difference. The world will have nearly as many problems worth solving then as now, with or without your help.

Let’s say I was the CEO of a small corporation that developed medical devices. … A sustainable revenue stream requires projects with a variety of timelines. Similarly, I shouldn’t only invest my company’s resources in a project with a huge payout that will take 15 years.

The world already has a big portfolio of idealistic projects. If you want your life to be one of those projects, you should accept that it has a natural timescale. There’s a best time to invest, and a best time to reap returns.

Hanson elicits skepticism in the idea that social changes enacted now will positively impact the future, without justification.

I’m not skeptical of future impacts, just of their typically growing in impact faster than financial investments.

However, I’d counter-argue that his position is just as weak: name someone who is making better-than-inflation on their investments in the last 11 years?

The last few years have been quite unusual in finance. Feasible long term financial rates of return are higher than economic growth rates.

If I am to put off charity for 20 years to compound interest, why not put it off 40 years to compound even more? Why not put it off for 100 years?

Why not indeed? If you think that your personal monitoring adds much value, you might want to spend before you die, so you can personally monitor your charities. Else you might instruct your charity fund to grow until it seems that worthy causes are about to run out, or that investments no longer grow.

Hanson totally misguides when he suggests that Young Idealism is sexually motivated.

I said “signal one’s attractiveness to potential associates.” I didn’t mention sex.

Then what explains extra altruism in the old?

I said “people tend more to form associations when young.” This implies only that old folks have a weaker need to signal, not that they have no need to signal.

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Impatient Idealism

Humans have long lives. We are unusually dependent on our parents when young, and we then slowly gain competence over a lifetime, usually reaching peak productivity in our forties and fifties. Most of the time we are aware of this. For example, we count on our peak earning years by taking out loans as young students, and later saving for retirement. And we prefer leaders at those peak ages.

But when people get idealistic, they tend to forget this. Young idealists often ask me and others what they can do to most help the world. Which is a fine question. But such folks tend to be impatient – they want to know how to most help the world in the next few years, not over their lifetime. So when they consider joining an idealistic project, they focus more on whether the project will succeed than on what skills and contacts they would acquire.

Yet young folks shouldn’t expect to have their biggest influence when young. Yes young folks have higher variance, and so sometimes get very lucky, but they should expect to prepare and learn while young, and then have their biggest influence in their peak years. Why such a short term focus? Especially since idealism should if anything induce a far view. Yes young folks are often short-sighted, but why be more so about altruism than about school, relationships, etc.?

This seems related to the puzzle of why people don’t leverage the power of compound interest to donate to help the future needy, instead of today’s needy. Some argue that the future won’t have any needy, or that helping today’s needy automatically helps future needy, at a rate growing faster than investment rates of return. I’m pretty skeptical about both of these claims.

One plausible explanation is that a habit of extra youthful altruism evolved as a way to signal one’s attractiveness to potential associates. People tend more to form associations when young, associations that they tend more to rely on when old. And potential associates like to see altruism, because it correlates with generosity and cooperation (as near-far theory predicts). But if you save money to help the future needy, or if you invest now in skills useful in future idealistic projects, that is less clearly a signal of altruism, because you might later change your mind and use that money or those skills for other purposes.

So to signal your youthful idealism to potential associates, you must spend the money and time now, even if such spending is less effective toward the idealistic cause. But hey, at least the cause gets something.

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Respectable Resentment

Assume for the purpose of this post that used car sales folks are exploitive and socially unproductive – they mainly trick buyers into spending more than they need. I don’t actually believe this, but I don’t want this post to be distracted by the issue of which professions are or are not socially productive.

So, imagine that you are competing to be a successful used car salesperson. But you find that you face real biases. Buyers are unfairly less willing to buy from you because you are female, or young, or the wrong ethnicity, or the wrong personality type. Or perhaps it is managers at used car sales firms who are biased against hiring your people. In any case, you have a legitimate complaint of bias, and you can legitimately resent that bias.

Even so, I don’t feel very sympathetic to your cause. Oh, on the margin I’d prefer that you win your battle against such biases. Its just that I don’t see it is as a high priority. Why? Because your cause is mostly selfish. Oh sure, the used car sales industry might be slightly more efficient if they weren’t unfairly biased against your sort. But by assumption what they’d get more efficient at is mostly exploiting ignorant buyers. Not a cause I can get behind.

Now imagine that you run a charity, and that while your charity is especially effective at its cause, e.g., reducing African poverty, it suffers from the bias that donors care more about using their donations to seem to help, than to actually help. You resent the fact that your charity doesn’t do so well because it isn’t as good at helping donors look caring. This time, I’m a huge supporter of your cause. Why? Because the bias you oppose is hurting us all, a lot.

So if you face gender bias getting hired as a cancer doctor, but for a type of cancer where doctors actually do little to help patients live longer, then I’m only mildly sympathetic. But If you suffer as a doctor because patients are biased to “do something,” and dislike your correctly telling them they are better off doing nothing, then I’m a huge fan and supporter.

If you suffer bias in academia because you are religious, but your chosen research area is mostly a pointless exercise in showing off math skills, I’m not going to get too worked up for you. But if your academic career suffers because your research is focused on a way to actually making important intellectual progress, which doesn’t happen to be a good way to show off math skills, I’ll shout your cause from the rooftops.

If you suffer from a bias based on the kind of person you are, you have a legitimate complaint. But it may not be an especially noble cause. However, if you suffer because of a common bias against doing a sort of thing that is especially useful, you may have a very noble cause. I can much more respect your resentment of a bias against doing good, than a bias against who you are.

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Alms is not about alms experts

In September Robin suggested that there might be an Alms Expert Opening:

Today the three spending categories of medicine, school, and alms make up ~40% of US GDP, a far larger fraction than in 1800. …

Today, two of these three classic charities have very powerful associated “professions”: doctors and teachers. These professions are powerful because they are seen as representing the good in those causes – doctors are our official authorities on what is good for patients, and teachers are our official authorities on what is good for students…

The missing group here is alms experts: we have no strong profession of those who specialize in helping the poor, crippled, etc.

Are alms experts punching below their weight, given the large fraction of GDP spent on alms? I think not, because alms spending mostly bypasses the work of alms experts.

Medical spending mostly goes to pay doctors, nurses, and other medical professionals, or to provide facilities and equipment that supports their work: there were over 7.5 million technically skilled healthcare workers in 2011. In education elementary schoolhigh school, and post-secondary teachers added up to over 4.4 million people, with other spending going to school buildings, principals, utilities, libraries, and so forth.

But consider the largest alms program in the United States, the Social Security Administration, which makes cash payments to the elderly, the disabled, and surviving family members of certain deceased. Its budget request projects that in 2013 it will pay out some $873 billion to beneficiaries while spending less than $12 billion for operations, with only 80,000 state and federal employees.

The relatively small role for administration recurs elsewhere, e.g. the food voucher program SNAP disbursed $76 billion in 2011 with administrative costs of $6.9 billion and the Earned Income Tax Credit disbursed $59.5 billion with direct administrative costs of less than one percent. Staffing can be higher for programs involving social workers and foreign assistance, but less is spent on these than the large formula-driven programs.

Since alms employees are relatively scarce, they can directly deliver fewer votes or political contributions than teachers or medical workers. And since their role in the provision of alms is so much less central, it is harder for others to see them as “representing the good in those causes.” Instead, organizations of recipients can take on the role of defenders of the alms they receive. For alms influence and status, look to the 38 million members of the AARP, not 80,000 Social Security workers.

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Why Admire Brags?

A few days ago Rob Wiblin complained about our admiration of anonymous charity:

Even those who are open about their good deeds are likely to hold a special admiration for anyone they discover has been secretly helping others for years. … This norm exists because when you go on about your altruism, … perhaps you made that donation just to be able to show off your virtue and wealth to everyone else. … [But] a culture of ‘private altruism’ has some seriously perverse effects. … We are less inclined to talk about … which causes are most valuable. .. Altruistic acts … will tend to be crowded out by alternatives that are unavoidably conspicuous – impressive cars, holidays, degrees and so forth. … Someone who really cared about helping others … would want to bring up the fact whenever they could get away with it, in order to draw attention to the merits of their cause and prompt others to join in. (more)

Charity has an overt and a covert purpose. The overt purpose is to help those who can’t trade to get the help they need. To understand the covert purpose, let’s review some basics about showing that we care.

Your associates care about how helpful you are to them. Sometimes they can see very clearly how helpful you are. For example, they might see you hold a door open, or answer a direct question. But most of the time their vision is obscured. So they have to look for clues in what they can see, to infer things unseen. For example, if they see you helping a similar associate in a situation where that associate can’t see the help, they might guess that you help them in similar situations where they can’t see. Conversely if they see you make fun of someone not in the room, they might wonder if you do the same to them when they are absent.

If they see you helping someone in need who can’t much help you back, they might guess that you would similarly help them if they were in similar need, but couldn’t help you back. And if they see you helping someone in a situation where you might reasonably guess that no one could see your help, they might think you would help them in a situation where you’d guess no one could see. There is thus a close functional association, and complementarity, between charity, helping people who can’t help you back much, and anonymity, helping when the recipient and others can’t see the help.

Given this complementarity between charity and anonymity, for the purpose of signaling, it makes sense that people recommend giving anonymously, and admire folks who do so. Sure, that may end up less helping distant others in need, but we all know that we don’t care much about that.

Imagine that after one person told another “I love your new dress, it makes you look thin,” you shouted “Liar. I know you don’t like dresses like that, and anyone can see this dress doesn’t maker her look thin.” Do you think either of them would appreciate your comment? They probably both know the speaker exaggerates, but still appreciate the exchange as a signal of friendship and loyalty. You are rudely insulting them both, because they did something they admire.

You’ll seem similarly tone deaf if you point out that charity givers are not giving in ways to maximally benefit recipients. The giver and the audience both admire the gift as a signal of loyalty and caring, which they see as good things, and in addition a third party benefits from the process. Yet there you are complaining that they aren’t doing even more. They can quite reasonably see you as rude, hostile, and ungrateful. Who made you the spokesperson for the recipients of their charity? Don’t you see how white lies smooth the social fabric?

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The Alms Expert Opening

Around 1800 in England and Russia, the three main do-gooder activities were medicine, school, and alms (= food/shelter for the weak, such as the old or crippled). Today the three spending categories of medicine, school, and alms make up ~40% of US GDP, a far larger fraction than in 1800. …

Foragers who personally taught kids, cared for sick folks, and gave food/shelter to weak folks, credibly signaled their loyalty to allies, at least when such needy were allies. Weak group selection helped encourage such aid as ways to signal loyalty. … [Today,] votes supporting spending taxes on medicine, school and alms are interpreted as showing loyal “caring” for one’s community. (more)

Today, two of these three classic charities have very powerful associated “professions”: doctors and teachers. These professions are powerful because they are seen as representing the good in those causes – doctors are our official authorities on what is good for patients, and teachers are our official authorities on what is good for students. So we tend to back these experts when they fight with other related organizations, such as when docs fight with insurance companies, or when teachers fight with mayors. This allows such experts to be very well paid and pampered relative to other professionals.

The missing group here is alms experts: we have no strong profession of those who specialize in helping the poor, crippled, etc. While there are of course people who specialize in such roles, they are not united together under a single recognized label to leverage public sympathy, and they do not speak as a unit, or negotiate as a unit with related organizations.

But, given the example of docs and teachers, it seems plausible that if alms experts were to create an encompassing profession of “feeders”, and if they as a unit publicly challenged other related organizations, like charities or government funders, this feeding profession could often get their way. Of course they’d probably mostly use their power to benefit themselves. To guess if they would help the world, ask yourself if organized docs and teachers help the world.

Even so, there does seem to be an as yet largely unused opening for a feeding profession.

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