4 ms·

Attempt to make money very efficiently, in any way reasonably practical and moral, particularly ways which are hard to duplicate absent having a billion dollars

by patio11 12y ago

Attempt to make money very efficiently, in any way reasonably practical and moral, particularly ways which are hard to duplicate absent having a billion dollars in your back pocket. Give it to someone who had demonstrated ability to turn money into positive charitable outcomes, in preference to giving it to the government or typical NGOs, who mostly have demonstrated ability to turn it into sinecures. Better yet, give it to many such someones in parallel, because portfolio theory exists. Continue maximizing on my comparative advantage in wealth generation as opposed to being comparatively ineffective but personally involved with charity, for the purpose of impressing people in cocktail conversation. Charity is, like heart surgery for my children, something I value highly enough to leave to very expensive dedicated professionals.

ahh 12y ago
> Better yet, give it to many such someones in parallel, because portfolio theory exists. This is a bit of a controversial topic among many people I know--not settled by any means--but portfolio theory doesn't really say what you think it does here. In particular, portfolio theory suggests diversification because it reduces variance, generally at the cost of some (small) amount of return. _Since your utility from money is concave_, variance reduction improves expected utility. Your utility from lives saved in the third world is (or should be), I think, linear. (Perhaps even convex, though that's a much more complicated argument.) While if I were a doctor, the 100th life I saved would seem a lot less interesting than the first, I don't think it has any less moral impact. Conclusion: variance reduction has little to no value, and if you think charity X is (in expected value) any measurable amount more efficient at $goal than Y, you should reallocate all donations from Y to X up to the limit of what X can efficiently spend.
- cjbprime 12y ago
  Just to back you up, the idea that risk aversion is not applicable to charitable giving and that you should optimally give to only one charity is fairly uncontroversial amongst the Effective Altruism movement, and has been talked about since before that movement had a name: http://www.slate.com/articles/arts/everyday_economics/1997/01/giving_your_all.html http://www.slate.com/articles/arts/everyday_economics/1997/0...
  - maxbrown 12y ago
    It's an interesting article, but I'm not sure I buy it. Boiled down, it sounds like the author is arguing for philanthropists to have only one cause. But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. I get that I could help hunger more by redirecting my rainforest money, but why is it logically the case that I should? Also, I find it interesting that the article discusses multiple causes, but not multiple organizations within one cause. There are hundreds if not thousands of organizations focused on cancer - to which do I give my donation? Only one?
    - cjbprime 12y ago
      > But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. This is exactly the "delusion of grandeur" being argued against in the article, though: "[people donate] as if they were thinking, "OK, I think I've pretty much wrapped up the problem of heart disease; now let's see what I can do about cancer."
- maxbrown 12y ago
  But aren't you making an assumption here that I have full, transparent knowledge of both the short-term and long-term efficiency of charity X and Y? The diversification buys me reduced risk of concentrated failure, I would assume just the same in philanthropy. If I give 100% of my donation to one organization, and it turns out they "perform" worse than I expected, it may have been better to split my donation among multiple organizations all of whom I expect to be highly efficient but cannot necessarily predict. Particularly in cases of multi-millions or billions when, even split, the money will meet a minimum threshold to make a difference.
  - nialo 12y ago
    That's an excellent description of trading reduced expected return for reduced variance actually means. What you seem to be saying is that your utility function isn't actually linear in lives saved, but is instead slightly concave or perhaps has a step change where the utility goes from 0 for lives < n to some positive number for lives > n (for some relatively small n).
napoleond 12y ago
> as opposed to being comparatively ineffective but personally involved with charity, for the purpose of impressing people in cocktail conversation I imagine there is also an element of personal fulfillment, satisfaction, and enjoyment that philanthropists get from being personally involved with charity--if that encourages them to donate more than a person who chooses not to be personally involved, it might be of net benefit. When you factor in the PR value, personal network, and unique expertise/insight that enormously successful captains of industry may provide, their involvement may be more effective than you're implying. (Especially since I'm not sure personal involvement with charity really replaces "wealth generation" very often... it seems more likely to replace retirement or a golf hobby.) Of course, I have no concrete data to back that idea in any direction--if you do, I'd be very curious to see it.
- SatvikBeri 12y ago
  There's a power law in startup success, and people who seriously study charity (such as GiveWell or Peter Singer) say there's a similar phenomenon in philanthropy: the best charities are often more than 100x as effective, per dollar, than average. One popular example: the Seeing Eye foundation spends more than $50,000 to train one Guide Dog[0], GiveWell estimates that the Against Malaria Foundation can save more than 10 lives with the same amount of money. So it's extremely unlikely that donating more will outweigh the impact of donating to the right charities. [0]: http://www.guidedog.org/content.aspx?id=564#trainingcost http://www.guidedog.org/content.aspx?id=564#trainingcost
  - cjbprime 12y ago
    > One popular example: the Seeing Eye foundation spends more than $50,000 to train one Guide Dog An even better counterpoint than AMF to this charity is that the money used to train the guide dog would cure blindness in around 1500 people in the developing world by funding their surgeries for trachoma/cataracts. (As told by Peter Singer.)
  - napoleond 12y ago
    > So it's extremely unlikely that donating more will outweigh the impact of donating to the right charities. Sure, but that's orthogonal to the point I was trying to make, which in the context of your comment could be summarized as "I see no reason to believe that charities which benefit from the involvement of the ultra-wealthy are guaranteed to be less effective than those which do not".

by patio11 12y ago

ahh 12y ago

> Better yet, give it to many such someones in parallel, because portfolio theory exists. This is a bit of a controversial topic among many people I know--not settled by any means--but portfolio theory doesn't really say what you think it does here. In particular, portfolio theory suggests diversification because it reduces variance, generally at the cost of some (small) amount of return. _Since your utility from money is concave_, variance reduction improves expected utility. Your utility from lives saved in the third world is (or should be), I think, linear. (Perhaps even convex, though that's a much more complicated argument.) While if I were a doctor, the 100th life I saved would seem a lot less interesting than the first, I don't think it has any less moral impact. Conclusion: variance reduction has little to no value, and if you think charity X is (in expected value) any measurable amount more efficient at $goal than Y, you should reallocate all donations from Y to X up to the limit of what X can efficiently spend.

cjbprime 12y ago
Just to back you up, the idea that risk aversion is not applicable to charitable giving and that you should optimally give to only one charity is fairly uncontroversial amongst the Effective Altruism movement, and has been talked about since before that movement had a name: http://www.slate.com/articles/arts/everyday_economics/1997/01/giving_your_all.html http://www.slate.com/articles/arts/everyday_economics/1997/0...
- maxbrown 12y ago
  It's an interesting article, but I'm not sure I buy it. Boiled down, it sounds like the author is arguing for philanthropists to have only one cause. But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. I get that I could help hunger more by redirecting my rainforest money, but why is it logically the case that I should? Also, I find it interesting that the article discusses multiple causes, but not multiple organizations within one cause. There are hundreds if not thousands of organizations focused on cancer - to which do I give my donation? Only one?
  - cjbprime 12y ago
    > But maybe I care equally about helping this generation with hunger and future generations with saving the rainforest. This is exactly the "delusion of grandeur" being argued against in the article, though: "[people donate] as if they were thinking, "OK, I think I've pretty much wrapped up the problem of heart disease; now let's see what I can do about cancer."
maxbrown 12y ago
But aren't you making an assumption here that I have full, transparent knowledge of both the short-term and long-term efficiency of charity X and Y? The diversification buys me reduced risk of concentrated failure, I would assume just the same in philanthropy. If I give 100% of my donation to one organization, and it turns out they "perform" worse than I expected, it may have been better to split my donation among multiple organizations all of whom I expect to be highly efficient but cannot necessarily predict. Particularly in cases of multi-millions or billions when, even split, the money will meet a minimum threshold to make a difference.
- nialo 12y ago
  That's an excellent description of trading reduced expected return for reduced variance actually means. What you seem to be saying is that your utility function isn't actually linear in lives saved, but is instead slightly concave or perhaps has a step change where the utility goes from 0 for lives < n to some positive number for lives > n (for some relatively small n).

napoleond 12y ago

> as opposed to being comparatively ineffective but personally involved with charity, for the purpose of impressing people in cocktail conversation I imagine there is also an element of personal fulfillment, satisfaction, and enjoyment that philanthropists get from being personally involved with charity--if that encourages them to donate more than a person who chooses not to be personally involved, it might be of net benefit. When you factor in the PR value, personal network, and unique expertise/insight that enormously successful captains of industry may provide, their involvement may be more effective than you're implying. (Especially since I'm not sure personal involvement with charity really replaces "wealth generation" very often... it seems more likely to replace retirement or a golf hobby.) Of course, I have no concrete data to back that idea in any direction--if you do, I'd be very curious to see it.

SatvikBeri 12y ago
There's a power law in startup success, and people who seriously study charity (such as GiveWell or Peter Singer) say there's a similar phenomenon in philanthropy: the best charities are often more than 100x as effective, per dollar, than average. One popular example: the Seeing Eye foundation spends more than $50,000 to train one Guide Dog[0], GiveWell estimates that the Against Malaria Foundation can save more than 10 lives with the same amount of money. So it's extremely unlikely that donating more will outweigh the impact of donating to the right charities. [0]: http://www.guidedog.org/content.aspx?id=564#trainingcost http://www.guidedog.org/content.aspx?id=564#trainingcost
- cjbprime 12y ago
  > One popular example: the Seeing Eye foundation spends more than $50,000 to train one Guide Dog An even better counterpoint than AMF to this charity is that the money used to train the guide dog would cure blindness in around 1500 people in the developing world by funding their surgeries for trachoma/cataracts. (As told by Peter Singer.)
- napoleond 12y ago
  > So it's extremely unlikely that donating more will outweigh the impact of donating to the right charities. Sure, but that's orthogonal to the point I was trying to make, which in the context of your comment could be summarized as "I see no reason to believe that charities which benefit from the involvement of the ultra-wealthy are guaranteed to be less effective than those which do not".